Labour Law II: 2-Hour Study Guide

About these notes

These notes cover Labour Law II (Social Security Legislations) for the LL.B. course, following the course outline for July–November 2026 (NLU Odisha, Cuttack). The material is arranged in seven modules and 117 numbered concepts, followed by a last-minute revision section.

Each concept is set out in the same order: the concept, its meaning in brief, a model exam answer, an example and a memory hook. Each case is set out as facts, decision, principle of law, example and conclusion.

Module	Topic	Lecture hours in the course outline	Concepts in these notes	High-importance concepts
I	Social security, the Constitution, the ILO and the four Labour Codes	4	1–9	1, 5, 6, 8, 9
II	Code on Wages, 2019: wages, minimum wage, payment of wages, bonus, claims and gender pay	15	10–36	10, 11, 13, 16–18, 20, 23, 24, 26–29, 31, 32, 35, 36
III	Employee's compensation (Code on Social Security, Chapter VII)	14	37–61	37, 38, 43–49, 51–54, 56, 57, 59
IV	ESI, gratuity, provident fund and other welfare	14	62–84	62, 63, 66–68, 70–77, 79–81, 83
V	Maternity and women's benefits	5	85–94	86, 87, 89, 92, 93
VI	Unorganised, gig and platform workers; contract labour	10	95–109	95–105, 107, 108
VII	Inter-State migrant workers	4	110–117	110, 111, 113, 115, 116
Total		66 (the rest of the 75 classes are tutorials)	Last-minute revision section at the end

Signs used in these notes

• † marks a point that could not be fully confirmed; it should be checked against class notes.
• ⚠ marks a case whose facts could not be verified.
• Persons named in the examples are imaginary; they are not the parties to any case.
• Words in brackets explain difficult terms.

Abbreviations

Short form	Full name
CoW	Code on Wages, 2019
CoSS	Code on Social Security, 2020
IR Code	Industrial Relations Code, 2020
OSH Code	Occupational Safety, Health and Working Conditions Code, 2020
MWA	Minimum Wages Act, 1948
PWA	Payment of Wages Act, 1936
ECA	Employees' Compensation Act, 1923
ESI Act	Employees' State Insurance Act, 1948
EPF Act	Employees' Provident Funds and Miscellaneous Provisions Act, 1952
PoG Act	Payment of Gratuity Act, 1972
MBA	Maternity Benefit Act, 1961
CLRA	Contract Labour (Regulation and Abolition) Act, 1970
ISMW Act	Inter-State Migrant Workmen Act, 1979
UWSSA	Unorganised Workers' Social Security Act, 2008

Common Errors in Course Outlines, Corrected

The course outline is only an outline. It gives topics, a few section numbers and the names of cases; it does not give the text of the Codes or the facts of any case. In these notes, section numbers of the three Codes follow the enacted text, and case facts follow reports of the judgments. Section numbers of the old Acts follow the course outline where it gives them; otherwise they should be confirmed on the bare Act. A case that could not be checked is marked ⚠.

#	What the course outline says	What is correct
1	"The new Codes have not yet been implemented."	The four Labour Codes were made effective on 21 November 2025 (Government of India press release). The course outline still requires the old laws to be covered, with the Codes highlighted. These notes therefore give the Code first and the old Act in one short line.
2	Chapter numbers such as "CoW Ch. III = Minimum Wages", "CoSS Ch. II = PF, Ch. III = ESI, Ch. IV = Compensation", "OSH Ch. VII / VIII = contract labour / migrant workers".	The Codes number them differently. CoW: Minimum Wages Chapter II; Payment of Wages Chapter III; Bonus Chapter IV. CoSS: Provident Fund Chapter III; ESI Chapter IV; Gratuity Chapter V; Maternity Chapter VI; Employee's Compensation Chapter VII; Building workers Chapter VIII; Unorganised, gig and platform workers Chapter IX. OSH Code: Contract labour = Chapter XI Part I; Inter-State migrant workers = Chapter XI Part II. These notes use the real chapter numbers.
3	"Bar on receipt of benefits (Section 77 of the Code)".	In the CoSS the bar is in Section 41(4) and Section 41(7). Section 77 deals with payment of compensation when due (Concept 57). The old rule is Section 53 of the ESI Act.
4	"C.67 (Income Security)" and "C.202 (Social Protection Floor)".	These are Recommendations (R.67 of 1944 and R.202 of 2012), not Conventions. A Recommendation only guides; it is not ratified.
5	"Displacement allowance" for migrant workers.	Displacement allowance belonged to the old ISMW Act, 1979. The OSH Code's Part on migrant workers (Sections 59–65) provides a journey allowance (Section 61) but no separate displacement allowance (Concept 113).
6	Some cases are listed under a topic different from the one they decide.	In these notes each case is placed under the topic it really decides (see the table below).

Cases listed under the wrong topic

Case	Listed in the course outline under	What the case really decides	Covered in these notes under
Ludhiana Hand Tools; Align Components	Fixing minimum wages, Advisory Boards	Wages during the COVID-19 lockdown (MHA order of 29 March 2020)	Concepts 24 and 117
Manganese Ore v. Chandi Lal Saha	Minimum wages: "limited to scheduled employments"	Minimum wage must be paid in cash; grain concession and attendance bonus cannot be deducted	Concept 19
Jyothi Home Industries	Minimum wages	Piece-rate workers and home-workers; "guaranteed wages"	Concept 22
PUDR v. Union of India	Floor wage	Non-payment of minimum wage = forced labour (Article 23)	Concept 18 (and Concept 5)
Roshan Deen v. Preetilal	Notice and claim	Contracting out (giving up compensation by agreement)	Concept 61
Union of India v. United Planters	Bonus eligibility	A transfer petition on the 2015 amendment to the Bonus Act	Concept 27
Saurashtra Salt; BEST v. Agnes	ESI: "arising out of employment"	Also the leading cases on notional extension	Concepts 47 and 70

Citation and name slips

• Francis De Costa is cited in the course outline as "1994 SCC (L&S) 195". The final decision of the larger bench is reported as (1996) 6 SCC 1.
• Rachna Chaurasia is cited as "WP No. 2467/2017". The judgment is Dr. Rachna Chaurasiya v. State of U.P. (Allahabad High Court, 29 May 2017), WP No. 24627 of 2017.
• Two cases could not be traced at all: V. Jayaraj and Batulbibi (marked ⚠).

Module I: Social Security (International and Constitutional Framework)

Module I (Concepts 1–9) covers the meaning of social security and labour welfare, the history of social-security law in India, the need for the Labour Codes, the constitutional basis of labour law, the ILO standards and an overview of the four Labour Codes.

1. Social Security (CoSS Section 2(78))

Exam importance: high

Every worker faces risks: old age, sickness, an accident at work, having a baby, losing the job, or the death of the person who earns for the family. Social security is the help that society gives at such times, so that the worker and the family do not fall into poverty.

• The help can be money, medical care, or both.
• It is paid for by the worker, the employer and the government.

Model exam answer

1. Two aims: income security (money when earning stops) and access to health care.
2. Two ways of giving:
   • Social insurance: people pay contributions (ESI, provident fund).
   • Social assistance: the government pays from taxes (for example, old-age pensions for poor people).
3. Risks covered: old age, unemployment, sickness, invalidity (permanent disability), work injury, maternity, and death of the breadwinner.
4. Who is covered: organised, unorganised, gig and platform workers.
5. Base: the Directive Principles (Articles 38, 39, 41, 42, 43 and 47) and ILO standards (Convention 102 of 1952).
6. Tools in the Code: provident fund, ESI, gratuity, maternity benefit, employee's compensation, cess for construction workers, and schemes for unorganised, gig and platform workers.

Conclusion: social security is a right-based safety net. It protects the worker's dignity and keeps the labour market stable.

2. Labour Welfare

Exam importance: medium

Labour welfare means the facilities and services given to workers to make work and life better: clean drinking water, a canteen, a rest room, a crèche (day-care for small children), medical help, housing, education and recreation. Social security helps in a crisis; welfare gives daily comfort.

Model exam answer

1. Statutory welfare (by law):
   • welfare facilities in the workplace (OSH Code, Chapter VI, Section 24);
   • a crèche in establishments with 50 or more employees (CoSS Section 67);
   • the Building Workers' Welfare Fund (CoSS Section 108).
2. Voluntary welfare (the employer's own choice): sports, scholarships, housing loans.
3. Mutual welfare (by workers): unions and co-operative societies.
4. Objects: better health and efficiency, industrial peace, and social justice (Articles 42 and 43).

	Social security	Labour welfare
Aim	Money and health cover in a crisis	Better daily conditions
Nature	Legal right to benefits	Facilities and services (legal or voluntary)
Example	ESI sickness benefit, pension	Canteen, crèche, rest room

Conclusion: both are needed. Welfare improves daily life, and social security protects against big risks.

3. Historical Evolution of Social Security Law in India

Exam importance: medium

In old India, the family and the village looked after people. When factories came, workers faced accidents and low pay, and there was no help. Small laws came first, then bigger insurance laws after independence, and now the four Labour Codes.

Model exam answer

1. Before 1947:
   • The Workmen's Compensation Act, 1923 made employers pay for work injuries. It was the first social-security law.
   • Early maternity laws came in some provinces (for example Bombay, 1929).
   • The Royal Commission on Labour (1929–31) asked for welfare and insurance measures.
2. After 1947:
   • The Constitution (1950) put welfare in the Directive Principles.
   • ESI Act, 1948: medical and cash benefits.
   • EPF Act, 1952: provident fund, later also pension and insurance schemes.
   • Maternity Benefit Act, 1961.
   • Payment of Gratuity Act, 1972.
   • Building Workers' Acts, 1996: welfare and cess.
   • Unorganised Workers' Social Security Act, 2008.
3. Reform reports: the National Commission on Labour of 1969 and the Second National Commission on Labour of 2002 (both are among the prescribed readings). The Second Commission asked for simpler, grouped laws and better cover for unorganised workers.
4. 2019–2020: Parliament passed the four Codes. They were made effective on 21 November 2025.

Conclusion: the law moved from "the employer must pay for injury" to "the State must protect every worker".

4. Need for Codification

Exam importance: medium

Codification means putting many scattered laws into a few organised books. It was needed because India had too many labour laws, with different definitions, different offices and different forms. This confused workers, employers and courts.

Model exam answer

1. Too many laws: 29 central laws (and many State laws) covered the same subjects.
2. Different definitions: the words "wages" and "employee" meant different things in different Acts. This caused anomalies (odd results) and much litigation. The course outline calls this "divergent wage definitions".
3. Low coverage: the Minimum Wages Act covered only scheduled employments, and the Payment of Wages Act had a wage ceiling. Most workers in India are in the unorganised sector, and they stayed outside these laws.
4. Heavy compliance: many registrations, licences, registers and returns. The Codes bring one registration, electronic filing and an Inspector-cum-Facilitator (an officer who guides as well as inspects).
5. New kinds of work: gig and platform work were not covered by any old law.
6. Reports: the Second National Commission on Labour (2002) recommended grouping the laws.
7. Aim: ease of doing business and wider protection for workers.

Conclusion: codification makes labour law simpler, wider and easier to enforce. Critics, however, say that some protections were reduced (for example, by higher thresholds).

5. Fundamental Rights Relevant to Labour (Articles 14, 19, 21, 23 and 24)

Exam importance: high

Fundamental Rights (Part III of the Constitution) are basic rights that a person can enforce in court. Five of them matter most for workers:

• equality (Article 14);
• freedoms such as forming unions and doing business (Article 19);
• life with dignity (Article 21);
• no forced labour (Article 23);
• no child labour in dangerous work (Article 24).

Model exam answer

Article	What it says	Link with labour
14	Equality before law and equal protection of the laws	Equal treatment; equal wages for equal work (CoW Section 3); reasonable classification for coverage.
19	Freedoms: Article 19(1)(c), to form associations or unions; Article 19(1)(g), to practise a profession or carry on a business	Workers form unions. The employer's freedom to run a business is subject to reasonable restrictions (Article 19(6)), such as minimum wage and bonus laws.
21	Life and personal liberty	Includes life with dignity, health, livelihood and humane working conditions. It is the basis of social security and safety laws.
23	No traffic in human beings, begar (forced work without pay) or other forced labour	PUDR v. Union of India (1982): paying less than the minimum wage is forced labour (see Concept 18).
24	No child below 14 to work in a factory, mine or other hazardous employment	PUDR: construction work is hazardous.

• These rights bind the State. Articles 17, 23 and 24 bind private persons too.
• Labour laws are made to give effect to these rights.

Conclusion: the Fundamental Rights give a legal shield to the worker, and labour laws turn that shield into detailed rules.

6. Directive Principles Relevant to Labour (Articles 38, 39, 41, 42, 43, 43A and 47)

Exam importance: high

Directive Principles (Part IV of the Constitution) are goals that the State should follow while making laws. Courts cannot force the State to obey them (Article 37), but they guide every labour law, and courts read them together with the Fundamental Rights.

Model exam answer

Article	Promise
38	The State is to secure a social order based on justice and to reduce inequality.
39	(a) adequate means of livelihood; (d) equal pay for equal work for men and women; (e) the health and strength of workers, and children, are not to be abused, and workers are not to be forced by need into unsuitable work.
41	Right to work, to education and to public assistance in unemployment, old age, sickness and disablement (within the State's means).
42	Just and humane conditions of work and maternity relief.
43	A living wage and conditions of work that ensure a decent standard of life.
43A	Workers' participation in the management of industries (added in 1976).
47	Raising the level of nutrition and the standard of living, and improving public health.

Use in labour law

Directive Principle	Labour law that gives effect to it
Article 39(d)	CoW Section 3 (equal wages)
Article 41	Pensions and social security
Article 42	Maternity benefit (CoSS Chapter VI)
Article 43	Minimum wage and floor wage

Conclusion: the Directive Principles are the "why" behind the Codes.

7. Legislative Competence and Constitutional Validity of the Codes

Exam importance: medium

Legislative competence is the power to make a law on a subject: the law-maker must be allowed by the Constitution to make a law on that topic. A law is valid if the law-maker has this power and the law does not violate the Constitution (for example Articles 14, 19 and 21).

Model exam answer

1. Concurrent List (List III, Seventh Schedule): both Parliament and the State Legislatures can make laws on these entries (Article 246(2)).
   • Entry 22: trade unions; industrial and labour disputes.
   • Entry 23: social security and social insurance; employment and unemployment.
   • Entry 24: welfare of labour, including conditions of work, provident funds, employers' liability, workmen's compensation, invalidity and old-age pensions and maternity benefits.
2. Union List: Entry 55 (regulation of labour and safety in mines and oilfields).
3. Conflict: if a State law clashes with a Central law on a concurrent subject, the Central law prevails (Article 254(1)), unless the State law has received the President's assent (Article 254(2)).
4. "Appropriate Government": the Codes give power to the Centre for railways, mines, oilfields, major ports and similar Central sectors, and to the State for other establishments (for example CoW Section 2(d)). States also make their own rules.
5. Test of validity: (a) legislative competence, and (b) no violation of Part III. Courts start with a presumption of constitutionality (an assumption, allowed by law, that the statute is valid).
6. Directive Principles: the Codes help to achieve Articles 38, 39, 41, 42 and 43.

Conclusion: the Codes fall within the shared (concurrent) legislative power, so they are valid unless a court finds a clash with Part III. No judgment striking down any Code is noted here, and the course outline names none.

8. ILO Framework (C.102, C.121, C.130, C.183, R.67 and R.202)

Exam importance: high

The International Labour Organization (ILO) is the United Nations body for labour. It makes two kinds of instruments:

• Conventions: treaties that a country may ratify (formally accept);
• Recommendations: guidance only.

India is a founding member of the ILO (1919).

Model exam answer

Instrument	What it covers	Note
C.102 Social Security (Minimum Standards) Convention, 1952	Nine branches: medical care, sickness, unemployment, old age, employment injury, family, maternity, invalidity and survivors' benefits. A country must accept at least three.	The base standard.
C.121 Employment Injury Benefits Convention, 1964	Medical care and cash benefits for work injury, occupational disease and death.	Higher standard than C.102.
C.130 Medical Care and Sickness Benefits Convention, 1969	Medical care and sickness cash benefit.	Higher standard than C.102.
C.183 Maternity Protection Convention, 2000	At least 14 weeks' maternity leave; cash benefit of at least two-thirds of earlier pay; protection from dismissal; nursing breaks.	Indian law gives 26 weeks.
R.67 Income Security Recommendation, 1944 (the course outline writes "C.67")	Guidance on income security.	A Recommendation, not a Convention.
R.202 Social Protection Floors Recommendation, 2012 (the course outline writes "C.202")	Every person should get a national "floor": basic health care, and basic income security for children, for people of working age who cannot earn, and for older persons.	A Recommendation.

India's record

• India has not ratified C.102, C.121, C.130 and C.183†.
• Even so, Indian laws (ESI, EPF, maternity benefit, employee's compensation) follow many of their ideas.
• Article 51(c) asks the State to respect international law.
• The list of Conventions not ratified by India should be confirmed on the ILO NORMLEX page, especially if a different list has been given in class.

Conclusion: ILO standards are the world yardstick, and the Codes try to move India closer to them.

9. The Four Labour Codes: Overview, Objectives, Scheme and Structure

Exam importance: high

Parliament put 29 central labour laws into four Codes: one on Wages, one on Industrial Relations, one on Social Security, and one on Occupational Safety, Health and Working Conditions. They were made effective on 21 November 2025.

Model exam answer

Code	Act	Old central laws merged	Main subjects
Code on Wages, 2019	Act 29 of 2019 (9 chapters, 69 sections)	4: Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; Equal Remuneration Act, 1976	Minimum wage, payment of wages, bonus, equal pay
Industrial Relations Code, 2020	Act 35 of 2020	3: Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946; Industrial Disputes Act, 1947	Unions, disputes, lay-off, retrenchment
Code on Social Security, 2020	Act 36 of 2020 (14 chapters, 164 sections)	9: Employees' Compensation, 1923; ESI, 1948; EPF, 1952; Employment Exchanges, 1959; Maternity Benefit, 1961; Gratuity, 1972; Cine-Workers Welfare Fund, 1981; Building Workers' Cess, 1996; Unorganised Workers' Social Security, 2008	Provident fund, ESI, gratuity, maternity, compensation, gig and platform workers
Occupational Safety, Health and Working Conditions Code, 2020	Act 37 of 2020 (14 chapters, 143 sections)	13: Factories, 1948; Plantations, 1951; Mines, 1952; Working Journalists Acts, 1955 and 1958; Motor Transport Workers, 1961; Beedi and Cigar Workers, 1966; Contract Labour, 1970; Sales Promotion Employees, 1976; Inter-State Migrant Workmen, 1979; Cine-Workers, 1981; Dock Workers, 1986; Building Workers, 1996	Safety, health, welfare, hours of work, contract labour, migrant workers

Total merged: 4 + 3 + 9 + 13 = 29.

Objectives

1. To simplify and unify the law.
2. Minimum wage and timely payment for all.
3. To extend social security to unorganised, gig and platform workers.
4. Safe and healthy workplaces.
5. Equal pay for men and women.
6. One registration, one licence, one return, and electronic filing.
7. An Inspector-cum-Facilitator in place of a pure inspector.

Legislative competence

Concurrent List, Entries 22, 23 and 24 (see Concept 7).

Scheme and structure

Each Code has chapters on:

• definitions;
• the main rights and duties;
• registration;
• authorities (the Inspector-cum-Facilitator);
• claims and appeals;
• offences and penalties;
• repeal of the old laws.

The CoSS also creates a Social Security Fund (Section 141) and has a Seventh Schedule that lists the types of aggregators.

Conclusion: the Codes aim to make labour law simple, wide and modern.

Module II: Code on Wages, 2019 – Remunerative Protections

Remuneration means payment for work. This module deals with the protections that the Code on Wages, 2019 (CoW) gives to remuneration.

10. Scope and Applicability (CoW Sections 1, 2(d), 5, 25 and 41)

Exam importance: high

The Code on Wages is the law on pay. It lays down how much minimum pay an employee must get, when and how wages are paid, what can be cut from wages, how bonus is paid and how claims are decided. Its big change is that it covers all employees in all establishments, and not only some listed jobs.

Nature of the Code

The Code on Wages, 2019 (Act 29 of 2019) is a Code to amend and combine the law on wages, bonus and connected matters.

Applicability of the Code at a glance

Aspect	Provision	Position under the Code
Extent and commencement	s.1	Extends to the whole of India; comes into force on the date(s) the Central Government notifies (effective from 21 November 2025).
Minimum wages	Chapter II; s.5	Apply to all employees in all establishments, organised or unorganised.
Payment of wages	Chapter III; s.25	Applies to all employees, but not to Government establishments unless the Government notifies them.
Bonus	Chapter IV; s.41(2); ss.40–41	Applies to establishments in which 20 or more persons are or were employed on any day of the accounting year (s.41(2)); some exemptions (for example LIC, seamen and dock workers) and special rules for the public sector (ss.40–41).
Equal pay	s.3	No discrimination on the ground of gender.
Appropriate Government	s.2(d)	The Centre for railways, mines, oil fields, major ports, air transport, telecom, banking and insurance, Central public sector companies and similar bodies; the State for all other establishments.
Machinery	ss.42, 45, 51	Advisory Boards (s.42), claims authorities (s.45) and Inspector-cum-Facilitators (s.51).

Old law compared

Law	Coverage
Minimum Wages Act, 1948 (MWA)	Only scheduled employments.
Payment of Wages Act, 1936 (PWA)	Only employees earning up to ₹24,000 a month in factories, railways and similar places.
Code on Wages, 2019	Universal: all employees in all establishments (bonus only where 20 or more persons are employed).

Conclusion: The Code is universal. Every worker gets minimum wage protection.

11. Employee (CoW Section 2(k))

Exam importance: high

An employee is any person who works for pay in an establishment. The word is very wide. It covers skilled and unskilled workers and also clerks, supervisors and managers.

Features of the definition

1. Includes a person declared to be an employee by the appropriate Government.
2. Excludes apprentices (under the Apprentices Act, 1961) and members of the Armed Forces of the Union.
3. No wage limit: managers and supervisors are covered.
4. Express or implied terms: written and unwritten agreements are both covered.

Old law compared

• Under the MWA, 1948, an employee was someone working in a scheduled employment.
• Under the PWA, 1936, an "employed person" was covered only up to a wage ceiling.

Conclusion: The Code gives one wide definition, so more people are protected.

12. Worker (CoW Section 2(z))

Exam importance: medium

"Worker" is a narrower word than "employee". It mainly means people doing manual, skilled, technical, clerical or supervisory work, and it leaves out managers.

Inclusions

• Working journalists and sales promotion employees.
• For the purpose of an industrial dispute, a person who was dismissed, discharged or retrenched because of that dispute.

Exclusions

1. Persons subject to the Air Force, Army or Navy Acts.
2. Police and prison staff.
3. Persons employed mainly in a managerial or administrative capacity.
4. Persons employed in a supervisory capacity drawing wages above ₹15,000 a month (or the amount the Centre notifies).

Employee and worker distinguished

Point	Employee (s.2(k))	Worker (s.2(z))
Scope	Wide: any level of work	Narrower: a smaller group inside "employee"
Managers and administrators	Covered	Excluded
Supervisors	Covered, with no wage limit	Excluded if drawing above ₹15,000 a month (or the notified amount)
Apprentices	Excluded	Excluded
Armed forces	Members of the Armed Forces of the Union excluded	Persons under the Air Force, Army or Navy Acts excluded
Use in the Code	General term (for example minimum wages under s.5)	Used, for example, in s.9: the floor wage is fixed on the minimum living standard "of a worker"

Conclusion: "Worker" is the smaller group inside "employee".

13. Employer (CoW Section 2(l))

Exam importance: high

The employer is the person responsible for paying wages. The Code makes sure that someone is always responsible: the owner, the person in control, the manager, or even the contractor.

Who is the employer

1. Government departments: the authority named by the head of the department, or the head of the department if no authority is named.
2. Local authority: its chief executive.
3. The definition also includes:
   • in a factory, the occupier (the person with ultimate control of the factory) and the named manager;
   • in any other establishment, the person or authority with ultimate control of its affairs, and the manager or managing director if the affairs are entrusted to one;
   • a contractor; and
   • the legal representative of a deceased employer.

Why the definition is wide

An employer cannot avoid the duty to pay wages by using a contractor.

Conclusion: The Code fixes responsibility on a real person at every level.

14. Establishment (CoW Section 2(m))

Exam importance: medium

An establishment is any place where business or work is done. It includes Government offices. The Code lays down no minimum size.

Features

1. Wide: no minimum number of employees, except for bonus, which needs 20 or more persons.
2. Government included: but Chapter III (payment of wages) applies to Government establishments only if notified (s.25).
3. Use in the Code: the definition is used to decide who is an employer, which Government is the "appropriate Government", and the bonus set-up (under s.30, departments, undertakings and branches are treated as parts of one establishment).

Conclusion: The definition is wide, so that no worker is left out.

15. Factory (CoW Section 2(n))

Exam importance: low

A factory is a workplace where goods are made using many workers. The Code on Wages does not write a new definition; it borrows the definition from another law.

Old and new thresholds

Law	With power	Without power
Factories Act, 1948, s.2(m) (old)	10 or more workers	20 or more workers
Occupational Safety, Health and Working Conditions Code (OSH Code), s.2(w) (new)	20 or more workers	40 or more workers

The Factories Act is now merged into the OSH Code. Under OSH Code s.2(w), a factory has 20 or more workers with power or 40 or more without power.

Use in the Code on Wages

The definition matters for the definition of "employer" (the occupier of a factory is the employer) and for deciding the "appropriate Government".

16. Wages (CoW Section 2(y))

Exam importance: high

"Wages" is the base for many payments: minimum wage, overtime, bonus and (under the Code on Social Security, CoSS) provident fund and gratuity. The Code has one common definition. It includes the core pay (basic pay, dearness allowance and retaining allowance) and leaves out extra items, but with a 50% safety rule so that employers cannot show low "wages" by making most of the pay an "allowance".

Included

1. Basic pay.
2. Dearness allowance (DA): extra pay to meet a rise in prices.
3. Retaining allowance: payment to keep a worker available.

Excluded – items (a) to (k)

• (a) Bonus that is not part of the terms of pay.
• (b) Value of house accommodation, light, water, medical care and other amenities.
• (c) Employer's contribution to a pension or provident fund, and the interest on it.
• (d) Conveyance allowance or the value of a travel concession.
• (e) Sums paid to meet special expenses of the job.
• (f) House rent allowance.
• (g) Remuneration under an award, settlement or court order.
• (h) Overtime allowance.
• (i) Commission.
• (j) Gratuity.
• (k) Retrenchment compensation, retirement benefit or ex gratia (voluntary) payment.

Safeguards in the definition

1. 50% rule: if the excluded items in (a) to (i) exceed one-half of the total remuneration, the excess is added back to wages.
2. Equal wages and payment of wages: for equal wages to all genders and for payment of wages, items (d), (f), (g) and (h) are counted as wages.
3. Payment in kind (Explanation): remuneration in kind up to 15% of total wages counts as wages.

Why one unified definition

Different Acts (the MWA, the PWA, the Bonus Act and others) defined "wages" differently. This led to anomalies and much litigation, and employers could reduce PF and gratuity by keeping "wages" low.

Worked example of the 50% rule

Step	Amount
Total pay	₹30,000
Basic pay	₹12,000
Excluded allowances	₹18,000
One-half of total pay	₹15,000
Excess of excluded items over one-half (added back)	₹3,000
Wages (₹12,000 + ₹3,000)	₹15,000

Conclusion: The definition protects workers from "salary splitting".

17. Floor Wage and National Floor Wage (CoW Section 9)

Exam importance: high

A floor wage is a national bottom level of wage. No State can fix its minimum wage below it. Earlier every State fixed its own minimum wage, so pay differed a lot between States.

Section 9

"The Central Government shall fix floor wage taking into account minimum living standards of a worker, in such manner as may be prescribed."

Features

1. Living standard: the Centre looks at the minimum living standard of a worker.
2. Different areas: the Centre may fix different floor wages for different geographical areas.
3. Consultation: before fixing the floor wage, the Centre may take the advice of the Central Advisory Board and consult State Governments.
4. Relation with State minimum wages: the minimum wage fixed by an appropriate Government must not be less than the floor wage. If a State's minimum wage is already higher, it cannot be reduced; if it is lower, it must be raised to the floor.
5. "National" floor wage: it is a single national base that stops a "race to the bottom" between States.

Old law compared

The MWA, 1948 had no national floor wage; each Government fixed its own rates.

Conclusion: The floor wage is a national safety line for wages.

18. Minimum Wages (CoW Sections 5 and 6)

Exam importance: high

The minimum wage is the lowest pay an employer may legally give. Courts speak of three levels of wages, and the Code fixes only the minimum.

Three levels of wages

Level	Meaning	Does it depend on the employer's capacity to pay?
Minimum wage	Bare survival plus preservation of the worker's efficiency	No (Crown Aluminium)
Fair wage	In between the minimum and the living wage	Yes
Living wage	Enough for a comfortable life	Yes

Provisions of the Code

1. Duty (s.5): no employer shall pay any employee wages less than the minimum rate notified. This applies to all employees.
2. Fixing (s.6): the appropriate Government fixes the minimum rates, subject to the floor wage (s.9) and the procedure in s.8. It may fix rates for time work or piece work, by the hour, day or month.
3. Factors: rates can differ by skill (unskilled, semi-skilled, skilled, highly skilled) and by geographical area, and can take account of arduous work, such as work in extreme heat or humidity, hazardous work or underground work.
4. Review: rates are to be reviewed and revised at intervals not exceeding five years.

Meaning of minimum wage in case law

A minimum wage must provide for bare survival and keep up the worker's efficiency. The norms of the 15th Indian Labour Conference (1957) are used, and Reptakos Brett added a further 25%.

Component	Norm
Consumption units	3 consumption units for one earner
Food	Minimum food requirement
Clothing	72 yards a year
Housing	Housing rent
Fuel and lighting	20% of the minimum wage
Added by Reptakos Brett (1992)	A further 25% for children's education, medical needs, minimum recreation (including festivals), and old age and marriage

Other settled principles

• Ability to pay is no defence: the employer's weak finances do not justify paying less than the minimum wage (Crown Aluminium).
• Below-minimum wage is forced labour: PUDR v. Union of India (Article 23).

Old law compared

The MWA, 1948 covered only scheduled employments.

Conclusion: The Code makes the minimum wage a universal right.

Leading cases on minimum wages

19. Components of Minimum Wages (CoW Section 7)

Exam importance: medium

A minimum wage can be built in different ways. It can be a basic rate plus a cost-of-living allowance, or a single "all-in" rate. The Code lists three ways.

Section 7: what the minimum rate may consist of

Option	Make-up of the minimum rate
(a)	A basic rate of wages and a cost of living allowance (an allowance that changes with the cost-of-living index, calculated by the authority the Government appoints).
(b)	A basic rate, with or without a cost of living allowance, and the cash value of concessions (for example essential goods supplied at concession rates).
(c)	An all-inclusive rate covering the basic rate, the cost of living allowance and the cash value of concessions.

Payment in cash

Minimum wages are to be paid in cash. A concession or bonus cannot be silently counted as part of the minimum wage (Manganese Ore).

Conclusion: The Government may choose the form, but the worker's real minimum must be protected.

20. Fixing and Revising Minimum Wages (CoW Section 8)

Exam importance: high

The Government cannot fix wages in secret. It must follow a fair process: it either forms committees, or publishes its plan and takes objections. For a revision made by publishing its plan, it must also consult the Advisory Board.

Two alternative methods (Section 8)

In fixing minimum rates for the first time, or in revising them, the appropriate Government shall follow either of these methods:

Method	What it involves
(a) Committee method	Appoint committees (with equal numbers of employers' and employees' representatives, and independent persons not more than one-third) to hold enquiries and advise.
(b) Notification method	Publish the proposals in the Gazette and allow at least two months for objections.

Steps after either method

1. The Government considers the committee's advice or the objections received.
2. For a revision made by the notification method, the concerned Advisory Board (s.42) must also be consulted.
3. The Government notifies the rates; they normally take effect after three months.
4. Review period: rates must be reviewed at intervals not exceeding five years.
5. Floor wage: the result must not go below the floor wage (s.9).

Old law compared

The MWA, 1948 had a similar committee/notification procedure with advisory boards, but only for scheduled employments.

Conclusion: The process makes minimum wages fair, open and regularly updated.

21. Advisory Boards – Central and State (CoW Section 42)

Exam importance: medium

Advisory Boards are three-sided (tripartite) bodies of employers, employees and independent persons that advise the Government on wages and on women's employment.

Central Advisory Board (Section 42(1))

The Central Advisory Board is set up by the Central Government. Its members are:

Category	Rule on numbers
(a) Representatives of employers	Sets the base number; the employees' side must equal it
(b) Representatives of employees	Equal to the number of employers' representatives
(c) Independent persons	Not more than one-third of the total members
(d) Representatives of State Governments	Five

Other features

1. Women (s.42(2)): one-third of the members must be women.
2. Chairperson: an independent member appointed by the Central Government.
3. State Advisory Boards (s.42(4)): each State Government forms its own Board on similar lines.
4. Functions: advising on the fixing and revision of minimum wages, on increasing employment opportunities for women, and on other matters under the Code.

Old law compared

The MWA, 1948 had Central and State Advisory Boards; the Code keeps the idea and adds a women's quota.

Conclusion: The Advisory Boards make wage decisions three-sided and fair.

Piece-Rate Wages and Minimum Time-Rate Wages for Piece Work (Code on Wages, Sections 6 and 12)

Exam importance: medium

Concept

Piece-rate wages are wages paid per piece made, for example ₹2 for each beedi rolled. The Code on Wages (CoW) makes sure that a piece-rate worker earns at least as much as a time-rate worker.

The law

1. Fixing minimum wages (Section 6): the Government may fix minimum wages for time work or for piece work. For piece work, the rate is set so that the worker earns at least what a time-rate worker would earn.
2. Minimum time rate for piece work (Section 12): where a person on piece work has a minimum time rate but no minimum piece rate, the employer must pay at least the minimum time rate.
3. Guaranteed wage: a guaranteed daily wage for piece workers, payable even when the employer does not supply enough work, is valid (Jyothi Home Industries v. State of Karnataka).

Old law: the Minimum Wages Act (MWA) also allowed piece-rate and "guaranteed time rate" provisions. The Code repeats them in a simpler form.

In short: a piece rate must never mean below-minimum pay.

Overtime, Hours of Work and Special Provisions (CoW, Sections 10 to 14)

Exam importance: high

Concept

Overtime is work beyond normal working hours. The Code says that overtime must be paid at at least double the normal rate. It also has special rules for part-days, for two kinds of work and for rest days.

Overtime (Section 14)

Where an employee works more than the hours of a normal working day, the employer must pay for every hour (or part of an hour) of extra work at a rate not less than twice the normal rate of wages.

Related provisions

Section	Subject	Rule
Section 13	Normal working day and rest day	The appropriate Government may fix the hours of a normal working day and provide for a day of rest, with pay or extra pay if work is done on that day.
Section 10	Work for less than a normal working day	If the employee is required to work for less than a normal day because the employer did not give work, the employee gets a full day's wages. This does not apply where the worker refuses to work.
Section 11	Two or more classes of work	Where an employee does two or more classes of work with different minimum rates, the employer must pay at least the minimum rate for each class, in proportion.
Section 12	Piece work	The minimum time rate applies (see piece-rate wages above).
Section 14	Overtime	Not less than twice the normal rate of wages for every hour or part of an hour.

Old law: Section 14 of the MWA allowed overtime at the "overtime rate fixed under the Act or any law, whichever is higher". The Code states the double rate clearly.

In short: overtime is a right, and it is paid double.

Payment of Wages: Wage Period and Time of Payment (CoW, Sections 16 and 17)

Exam importance: high

Concept

A worker needs wages on time to live. The Code requires the employer to fix a wage period (a day, a week, a fortnight or a month) and to pay within a fixed time after the period ends. It also sets a short deadline when a worker leaves the job.

Wage period (Section 16)

• The employer must fix a wage period of a day, a week, a fortnight or a month.
• No wage period can be longer than one month.

Time limit for payment (Section 17)

Situation	Wages must be paid	Provision
Daily-rated employees	At the end of the shift	Section 17(1)
Weekly wage period	On the last working day of the week, before the weekly holiday	Section 17(1)
Fortnightly wage period	Before the end of the second day after the fortnight ends	Section 17(1)
Monthly wage period	Before the expiry of the 7th day of the next month	Section 17(1)
Employee removed, dismissed, retrenched or resigns	Within two working days	Section 17(2)

• Other times: the appropriate Government may fix other reasonable times for payment (Section 17(3)).
• Other laws: provisions of other laws on the time of payment remain valid (Section 17(4)).

Old law: the Payment of Wages Act, 1936 (PWA) also required payment by the 7th day (the 10th day for establishments with 1,000 or more persons) and within two working days when employment ended. The Code adds resignation to the two-day rule.

In short: timely payment is part of the right to wages.

Wages during the COVID-19 lockdown

The Ministry of Home Affairs (MHA) order of 29 March 2020, issued under Section 10(2)(l) of the Disaster Management Act, 2005, told private employers to pay full wages to all workers for the lockdown period. Two challenges to this order are important.

Point	Ludhiana Hand Tools Association	Align Components
Court	Supreme Court	Bombay High Court, Aurangabad Bench
Challenge	MHA order of 29 March 2020 requiring full wages	The same MHA order
Employers' stand	Conflict with the 50% lay-off rule of the Industrial Disputes Act; no income to pay	Willing to pay 50% of gross wages or the minimum wage, whichever higher
Outcome	Interim relief: no coercive action; main question left open	Declined to interfere; wages of employees not reporting for duty in reopened areas may be deducted

Mode of Payment of Wages and Digitisation (CoW, Section 15)

Exam importance: medium

Concept

Mode of payment means how wages are given: in cash, by cheque, into the bank account or by an electronic (online) method. The Code pushes payment through banks, so that there is a record and no cheating.

The law

1. Section 15: all wages shall be paid in current coin or currency notes, or by cheque, or by crediting the wages in the employee's bank account, or by the electronic mode.
2. Digitisation mandate: the appropriate Government may direct that certain industrial or other establishments pay wages only by cheque or by crediting the wages in the employee's bank account.
3. Benefit: payment through the bank creates a record, reduces cheating and helps the worker prove a claim.

Old law: under the PWA, 1936 (Section 6, as substituted in 2017), wages could be paid in coin or notes, by cheque or by crediting the employee's bank account, and the Government could require notified establishments to pay only by cheque or bank credit.

In short: the Code moves wage payment from cash to digital records.

Authorised Deductions from Wages (CoW, Sections 18 to 24)

Exam importance: high

Concept

A deduction is money cut from wages. The Code says no deduction may be made except those it allows, and the total deduction in a wage period cannot be more than 50% of the wages.

General rule (Section 18)

• Rule (Section 18(1)): no deduction may be made except those authorised by the Code.
• Cap (Section 18(3)): total deductions in a wage period cannot exceed 50% of the wages. Any excess is recoverable in the manner prescribed (Section 18(4)).
• Failure to deposit (Section 18(5)): if the employer fails to deposit the amounts deducted, the employee is not responsible.

Deductions allowed (Section 18(2))

• Fines.
• Absence from duty.
• Damage to or loss of goods entrusted to the employee.
• House-accommodation and amenities supplied by the employer.
• Recovery of advances (for example travel or conveyance advances) and loans, including house-building loans with interest.
• Income tax and other statutory levies.
• Contributions to social security funds.
• Trade union fees (with the employee's written authorisation).
• Contributions to the Prime Minister's National Relief Fund (with authorisation).
• A few railway-related deductions.

Conditions for particular deductions (Sections 19 to 24)

Section	Deduction	Conditions
Section 19	Fines	Only for acts listed in a notice approved by the Government; the employee must get a chance to show cause; at most 3% of wages for the wage period; no fine on an employee under 15; the fine must be recovered within 90 days; fines may be used only for purposes that benefit the employees.
Section 20	Absence from duty	In proportion to the period of absence; if ten or more employees are absent without notice, up to eight days' wages may be deducted.
Section 21	Damage or loss	Only up to the loss caused by the employee's neglect or default, and only after a chance to show cause.
Section 22	Services	Allowed within the rules made under the Code.
Section 23	Advances	Allowed within the rules made under the Code.
Section 24	Loans	Allowed within the rules made under the Code.

Old law: the PWA, 1936 (Sections 7 to 13) had a similar list, with a 50% cap (75% where there were payments to co-operative societies).

In short: deductions are allowed only for lawful reasons, with fairness and a cap.

Bonus: Applicability, "Establishment" and Eligibility (CoW, Sections 26, 30, 40 and 41)

Exam importance: high

Concept

Bonus is a yearly payment to employees out of the profits of the business, over and above wages. The Code says who gets it, in which establishments, and at least how much.

The law

1. Applicability (Chapter IV): the Chapter applies to establishments where 20 or more persons are or were employed on any day of the accounting year (Section 41(2)).
2. Exemptions (Section 41): for example LIC, seamen, dock workers, Government employees, certain educational and charitable institutions, the Reserve Bank, some public financial institutions and inland water transport.
3. Public sector (Section 40): covered only where the establishment sells goods or services in competition with the private sector and this income is at least 20% of its gross income.
4. "Establishment" (Section 30): where an establishment has different departments, undertakings or branches, they are treated as parts of the same establishment for bonus. The old Act had a proviso for units with separate balance sheets (see K.C.P. Employees' Association below).
5. Eligibility (Section 26): every employee drawing wages not more than the amount the Government notifies (₹21,000 a month under the old Act) who has worked at least 30 days in the accounting year.
6. Payment: bonus is paid out of the allocable surplus (see the bonus formula below), subject to a minimum and a maximum.

Old law: Payment of Bonus Act, 1965: coverage of establishments with 20 persons; eligibility ceiling of ₹21,000 after the 2015 amendment; calculation ceiling of ₹7,000 or the minimum wage, whichever is higher.

In short: bonus is a statutory right for eligible employees in covered establishments.

Bonus ceiling	Before the 2015 amendment	After the 2015 amendment (retrospective from 1 April 2014)	Under the Code
Eligibility limit (wages a month)	₹10,000	₹21,000	Amount notified by the Government
Wage ceiling for calculating bonus	₹3,500	₹7,000 or the minimum wage, whichever is higher	Ceiling wage fixed by the Government

Bonus Formula: Gross Profit, Prior Charges, Available Surplus and Allocable Surplus (CoW, Sections 31 to 35)

Exam importance: high

Concept

Bonus is not a random amount; the law gives a formula. Start with the profit, subtract certain fixed charges, and share what is left: a part of it goes to the workers. That part is the allocable surplus.

Steps in the formula

1. Gross profit (Section 32): the profit of the accounting year, calculated as prescribed by the Central Government.
2. Prior charges (Section 34): sums deducted first:
   • depreciation (fall in the value of machines) allowed under the Income-tax Act;
   • direct tax payable for the year (calculated under Section 35); and
   • further sums the Central Government prescribes.
3. Available surplus (Section 33): gross profit minus prior charges (with the tax adjustment in the proviso).
4. Allocable surplus (Section 31): 67% of the available surplus (60% for a banking company). Bonus is paid out of this.
5. Calculation for certain employees: for high-paid employees, bonus is calculated on a ceiling wage fixed by the Government (old Act: ₹7,000 or the minimum wage, whichever is higher).

Worked example

Item	Amount
Gross profit	₹50 lakh
Less: depreciation	₹10 lakh
Less: direct tax	₹12 lakh
Total prior charges	₹22 lakh
Available surplus (₹50 lakh − ₹22 lakh)	₹28 lakh
Allocable surplus (67% × ₹28 lakh)	₹18.76 lakh

Old law: Payment of Bonus Act, 1965, Sections 4 to 12 (with a longer list of prior charges).

In short: the formula makes bonus fair, predictable and open to audit.

Minimum Bonus and Maximum Bonus (CoW, Sections 26 to 28)

Exam importance: high

Concept

The law protects the worker in two ways. Even if the company makes no profit, a small minimum bonus must be paid. If the profit is large, the bonus grows but stops at a maximum.

The law

1. Minimum bonus (Section 26(1)): an annual minimum bonus of 8⅓% of the wages earned or ₹100, whichever is higher, is payable to every eligible employee (wages up to the notified ceiling and at least 30 days' work). It is payable whether or not there is an allocable surplus.
2. Maximum bonus (Section 26(3)): if the allocable surplus is more than the minimum bonus payable, the employer pays bonus in proportion to the wages earned, up to 20% of such wages.
3. Proportionate reduction (Section 27): if an employee did not work on all working days, the minimum bonus is reduced in proportion where it is higher than 8⅓% of the wages for the days worked.
4. Days counted as worked (Section 28):
   • days of lay-off (as per agreement or standing orders);
   • leave with wages;
   • absence due to temporary disablement caused by an accident arising out of employment;
   • maternity leave with wages.

Point	Minimum bonus	Maximum bonus
Provision	Section 26(1)	Section 26(3)
Rate	8⅓% of wages earned or ₹100, whichever is higher	Up to 20% of wages earned
When payable	Whether or not there is an allocable surplus	When the allocable surplus is more than the minimum bonus payable
Worked example (annual wages counted ₹84,000, i.e. ₹7,000 × 12)	8.33% × ₹84,000 ≈ ₹7,000	20% × ₹84,000 = ₹16,800

Old law: Payment of Bonus Act, Sections 10 and 11.

In short: the minimum bonus is the floor, and the 20% limit is the cap.

Bonus for New Establishments (CoW, Section 26(6))

Exam importance: medium

Concept

A new business usually makes no profit in its early years. The law gives it relief: for the first five years, bonus is payable only in a year in which it earns a profit.

The law

1. Rule (Section 26(6)): in the first five accounting years following the year in which the employer first sells the goods produced or renders services from the establishment, bonus is payable only in the accounting year in which the employer derives profit from that establishment.
2. Effect: the minimum-bonus rule ("payable even if there is no profit") does not apply in those years.
3. After five years: the normal rules (minimum and maximum bonus, set-on and set-off) apply.

Old law: Payment of Bonus Act, Section 16.

In short: the rule protects young businesses and still gives workers a share of any profit.

Set-On and Set-Off of Allocable Surplus (CoW, Section 36)

Exam importance: high

Concept

Some years are good and some are poor. The law lets the employer carry a good year's extra surplus forward (set-on) and use it to pay bonus in a later poor year. If a poor year's surplus cannot cover even the minimum bonus, the shortfall is carried forward and recovered from later years' surplus (set-off). This evens out bonus over time.

The law

Point	Set-on (Section 36(1))	Set-off (Section 36(2))
When it arises	Allocable surplus is more than the maximum bonus payable in the year	Allocable surplus is less than the minimum bonus payable
What is carried forward	The excess	The deficiency
Period	To the next year, and so on, up to four accounting years	Similarly, up to four years, adjusted against future surplus
Limit	Total amount set on cannot exceed 20% of the total wages of the employees	—

Order of adjustment (Section 36(4)): the amount carried forward from the earliest year is taken into account first.

Old law: Payment of Bonus Act, Section 15.

In short: set-on and set-off give stability over a four-year period.

Disqualification from Bonus (CoW, Section 29)

Exam importance: high

Concept

An employee loses the right to bonus if dismissed for serious wrongdoing. The Code lists the grounds.

Grounds (Section 29)

An employee is disqualified from receiving bonus if dismissed from service for:

1. fraud;
2. riotous or violent behaviour while on the premises of the establishment;
3. theft, misappropriation or sabotage (deliberate damage) of any property of the establishment; or
4. conviction for sexual harassment (a new ground added by the Code).

• The dismissal must be for one of these reasons.
• The list is complete (exhaustive).

Old law: Payment of Bonus Act, Section 9 (the first three grounds only).

In short: serious misconduct costs the employee the bonus.

33. Deduction for Misconduct and Adjustment of Customary or Interim Bonus (Code on Wages, ss.37–38)

Exam importance: medium

Meaning

The Code on Wages (CoW) contains two small rules that settle the bonus account between the employer and the employee:

• if an employee's misconduct caused the employer a loss, the employer may cut that loss from the bonus; and
• if the employer has already paid a festival bonus or a part-payment of bonus, it can be adjusted against the bonus due.

Exam answer

1. Adjustment of customary or interim bonus (s.37): if, in an accounting year, the employer has paid a puja bonus or other customary bonus, or has paid part of the bonus before the due date, he may deduct that amount from the bonus payable under the Code.
2. Deduction for misconduct (s.38): if an employee is found guilty of misconduct causing financial loss to the employer, the employer may deduct the amount of that loss from the bonus payable to the employee for that accounting year.
3. Limit: the deduction cannot be more than the loss caused, and the misconduct must be proved.

Old law: Payment of Bonus Act, ss.17 and 18.

Conclusion: both rules keep the bonus account fair for the employer and the worker.

34. Time Limit for Payment of Bonus (CoW s.39)

Exam importance: medium

Meaning

Bonus must be paid within a fixed time after the accounting year ends. Without a time limit, employers could delay payment for years.

Exam answer

1. Rule (s.39(1)): all bonus must be paid by crediting the employee's bank account within eight months from the close of the accounting year.
2. Extension: the appropriate Government may extend the period, for sufficient cause, up to a total of two years.
3. Pending dispute (s.39(2)): where a dispute about bonus is pending, the bonus is payable within one month from the date on which the award or settlement becomes enforceable. The minimum bonus must still be paid within eight months.
4. Bonus disputes are treated as industrial disputes (s.46).

Old law: Payment of Bonus Act, s.19.

Conclusion: a time limit stops indefinite delay in paying bonus.

35. Claims, Appeals and Limitation (CoW ss.43–49, 54)

Exam importance: high

Meaning

If an employer does not pay wages, minimum wages or bonus, the employee can make a claim before an officer. If either side is unhappy with the decision, there is an appeal. Both must be filed within a fixed time, called the limitation period.

Exam answer

1. Responsibility (s.43): every employer must pay all amounts due under the Code. If the employer defaults, the proprietor or the persons in charge are responsible.
2. Death of employee (s.44): unpaid dues are paid to the nominee, or deposited with the prescribed authority. On doing so, the employer is discharged.
3. Claims (s.45): the appropriate Government appoints authorities (officers) to hear claims.
   • An application may be made by the employee, a registered trade union, or the Inspector-cum-Facilitator.
   • It must be made within three years from the date on which the claim arose; this period can be extended for sufficient cause.
4. Order: the authority can order payment of the claim plus compensation up to ten times the amount claimed. It has the powers of a civil court and should decide the claim within three months.
5. Appeal (s.49): lies within ninety days to an appellate authority (a higher officer), which should decide the appeal within three months.
6. Bonus disputes (s.46) are industrial disputes.
7. Offences (ss.52–56):
   • Cognizance (s.52): a court takes cognizance (notice) of an offence only on a complaint by the Government, an authorised officer, the employee, a registered trade union or the Inspector-cum-Facilitator.
   • Penalty for paying less than what is due (s.54): fine up to ₹50,000 for the first offence. A repeat offence within five years can bring imprisonment up to three months, or a fine up to ₹1 lakh, or both.

Key time limits at a glance

Step	Time limit
Filing a claim (s.45)	Within 3 years from the date the claim arose (extendable for sufficient cause)
Decision by the authority on the claim	Should be within 3 months
Filing an appeal (s.49)	Within 90 days
Decision by the appellate authority (s.49)	Should be within 3 months

Old law and the Code compared

Point	Old law	Code on Wages
Time limit for a claim	Minimum Wages Act, 1948 (MWA), s.20: 6 months; Payment of Wages Act, 1936 (PWA), s.15: 12 months	A single, longer period of 3 years
Authorities	Separate authorities under each Act	Authorities appointed under s.45 hear claims under the Code
Compensation	Lower than under the Code	Higher: up to 10 times the amount claimed

Conclusion: the claim system under the Code is faster and wider, and has a longer time limit.

36. Gender Pay Gap (CoW ss.3–4 and s.2(y), Second Proviso)

Exam importance: high

Meaning

The gender pay gap is the difference between what men and women (and persons of other genders) are paid for the same work. The Code provides that no employer can pay differently for the same work only because of gender.

Exam answer

1. Equal wages (s.3(1)): there shall be no discrimination in an establishment among employees on the ground of gender in matters relating to wages, for the same work or work of a similar nature.
2. No lowering of wages (s.3(2)): an employer cannot reduce anyone's wages in order to comply with this rule.
3. Recruitment and conditions of service: there shall be no discrimination on the ground of gender
   • in recruitment for the same or similar work; and
   • in conditions of service, such as promotion, training or transfer,
   except where a law prohibits or restricts the employment of women in that work.
4. Dispute on "same or similar work" (s.4): decided by an authority notified by the appropriate Government.
5. Wages counted for equal pay: the second proviso to s.2(y) counts conveyance allowance, house rent allowance (HRA), awards and overtime as part of wages for the purpose of equal wages to all genders.
6. Women's voice: one-third of the members of the Advisory Board are women (s.42(2)). State Advisory Boards also advise on employment opportunities for women.
7. Constitutional base: Art. 14, Art. 39(d) and Art. 42.

Old law: Equal Remuneration Act, 1976, now merged into the Code.

Conclusion: the Code widens equal pay beyond wages to recruitment and career growth.

Module III: Code on Social Security, 2020 — Employer Liability and Compensation

37. Employee's Compensation: Scope and Applicability (CoSS Chapter VII, ss.73–99)

Exam importance: high

Meaning

If a worker is hurt or killed because of work, the employer must pay compensation. The worker does not have to prove that the employer was careless. This is a no-fault rule. Chapter VII of the Code on Social Security, 2020 (CoSS) replaces the Employees' Compensation Act, 1923 (ECA).

Exam answer

1. Nature: a social-security law that gives quick, no-fault money help for work injury, occupational disease and death.
2. Who is covered:
   • The Chapter applies to employers and employees to whom Chapter IV (ESI) does not apply (First Schedule).
   • "Employee" for this Chapter means only the persons listed in the Second Schedule (for example, work in railways, factories using power, mines, ships, ports, building and road construction, electric and telephone lines, and pipelines), and others whom the Government adds (s.2(26), third proviso).
3. Main rules: see the table below.
4. Authority:
   • A competent authority decides claims (s.90).
   • Civil courts have no jurisdiction (s.90(2)).
   • An appeal lies to the High Court on a substantial question of law (s.99).
5. New in the Code:
   • an accident while commuting to or from work is covered if there is a nexus with the employment (s.74(4));
   • funeral expenses of at least ₹15,000 (s.76(7)): funeral expenses were already payable under the ECA, s.4(4) (at least ₹5,000 in the Act's text), so what is new is the higher floor;
   • medical expenses are reimbursed (s.76(5)): this is not new, as it continues the ECA, s.4(2A); and
   • an accident outside India is covered (s.2(28)).

Main rules of Chapter VII

Subject	Section
Employer's liability for compensation	s.74
Amount of compensation	s.76
Payment of compensation and default	s.77
Calculation of (monthly) wages	s.78
Distribution of compensation	s.81
Notice and claim	s.82
Competent authority; bar on civil courts	s.90, s.90(2)
Appeal to the High Court	s.99

Old law: ECA, 1923, which covered "workmen" listed in Schedule II.

Conclusion: the Code keeps the no-fault rule and widens it.

38. Dependant (CoSS s.2(24))

Exam importance: high

Meaning

When a worker dies, the compensation goes to the people who depended on the worker's earnings. The Code lists them. Some relatives are dependants automatically; others are dependants only if they really depended on the worker.

Exam answer

"Dependant" means any of the following relatives of a deceased employee:

Group	Condition	Relatives
(a)	Always dependants (automatic)	A widow; a minor legitimate or adopted son; an unmarried legitimate or adopted daughter; a widowed mother. For ESI, an adopted son below 25 also counts.
(b)	Only if wholly dependent on the employee's earnings	A legitimate or adopted son or daughter aged 18 or more who is infirm. For ESI, "18" becomes "25".
(c)	Only if wholly or partly dependent on the employee's earnings	a widower; a parent other than a widowed mother; a minor illegitimate son; an unmarried illegitimate daughter; a daughter who is married and a minor, or widowed and a minor; a minor brother; an unmarried sister, or a widowed sister who is a minor; a widowed daughter-in-law; a minor child of a pre-deceased son; a minor child of a pre-deceased daughter, where no parent of the child is alive; and a grandparent, where no parent of the employee is alive.

Use of the definition: the competent authority shares the compensation among the dependants (s.81).

Conclusion: the definition puts the closest family first and also includes others who truly depended on the worker.

39. Employee for Chapter VII (CoSS s.2(26))

Exam importance: medium

Meaning

For compensation, "employee" means a person employed for wages in an establishment, directly or through a contractor. But for Chapter VII, only persons in the Second Schedule are covered.

Exam answer

1. General meaning (s.2(26)):
   • any person (except an apprentice) employed on wages by an establishment, directly or through a contractor;
   • for skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical or any other work;
   • includes a person declared to be an employee by the Government;
   • excludes members of the Armed Forces.
2. Chapter VII (third proviso): only persons in the Second Schedule, and others added by the Central or State Government, are employees for this Chapter.
3. No wage ceiling applies for this Chapter. The wage ceiling applies only to Chapter III (except the EPF Scheme) and Chapter IV.

Old law: the ECA, 1923 defined "workman" with a Schedule II list; managers earning above a limit were excluded.

Conclusion: the Code covers the listed trades and also contract workers.

40. Employer (CoSS s.2(27))

Exam importance: medium

Meaning

The employer is the person who pays compensation. The Code makes sure that someone real is liable, even if a contractor or a manager runs the business.

Exam answer

"Employer" means a person who employs, directly or through any person, or on his behalf, one or more employees in his establishment. It includes the following:

Clause	Establishment	Who is the employer
(a)	Factory	The occupier
(b)	Mine	The owner, agent or manager appointed as such
(c)	Any other establishment	The person or authority with ultimate control; and, where the affairs are entrusted to a manager or managing director, that manager or managing director
(d)	Any establishment	A contractor
(e)	Any establishment	The legal representative of a deceased employer
—	Government department	The authority named for the purpose, or the head of the department
—	Local authority	Its chief executive

Link with s.85: a principal employer is liable for the compensation of a contractor's workers.

Conclusion: no employer can escape liability by using a middleman.

41. Wages and "Monthly Wages" (CoSS ss.2(88), 78)

Exam importance: medium

Meaning

Compensation is worked out as a share of the worker's monthly wages, so the law lays down exactly how the monthly wages are to be found.

Exam answer

1. "Wages" (s.2(88)): the definition has the same structure as the CoW definition: basic pay, dearness allowance and retaining allowance, minus the listed exclusions, together with the 50% rule and the 15% rule for payment in kind (see Concept 16).
2. Monthly wages (s.78): the amount of wages deemed to be payable for a month's service, whether the wages are paid by the month, by any other period or at piece rates. It is calculated as shown in the table below.
3. Ceiling: the Central Government may notify a ceiling on monthly wages for the calculation (s.76(3)).

Calculation of monthly wages (s.78)

Clause	Continuous service with the same employer before the accident	Monthly wages
(a)	At least 12 months	One-twelfth of the total wages for the last 12 months
(b)	Less than one month	The average monthly amount earned by a similar employee in the same work in the last 12 months
(c)	Other cases	30 × the total wages earned in the last continuous period ÷ the number of days in that period

Service is continuous when it is not broken by an absence of more than 14 days.

Conclusion: a clear rule for monthly wages makes the amount of compensation certain.

42. Managing Agent (ECA s.2(1); CoSS ss.2(1), 2(27))

Exam importance: low

Meaning

A managing agent is a person or firm who manages the business of the employer on the employer's behalf. Under the old Act, such a person counted as an "employer", so a worker could claim from the person who really ran the business.

Exam answer

Law	Position
Old law: ECA, 1923	"Employer" included any body of persons, the managing agent of the employer, and the legal representative of a deceased employer.
CoSS	There is no separate "managing agent" clause. The same idea is covered through: "agent" (s.2(1)): every person, whether appointed as such or not, who, acting on behalf of the owner, takes part in the management, control, supervision or direction of the establishment; and "employer" (s.2(27)), which includes the manager or managing director and, for a mine, the owner, agent or manager.

Reason: to make the person in real control liable for compensation.

Conclusion: whoever really runs the business is responsible.

43. Partial Disablement (CoSS s.2(55))

Exam importance: high

Meaning

Disablement means loss of the ability to work. It can be full or partial. Partial disablement means that the worker can still work, but earns, or can earn, less than before.

Exam answer

1. Permanent partial disablement (s.2(55)): disablement of a permanent nature that reduces the earning capacity of an employee in every employment which he was capable of undertaking at the time of the accident.
2. Deemed cases: every injury listed in Part II of the Fourth Schedule is deemed to result in permanent partial disablement (for example, loss of a finger or of a toe, each with a fixed percentage of loss of earning capacity).
3. Temporary partial disablement is covered by "temporary disablement" (Concept 45).
4. Compensation: a percentage of the compensation for permanent total disablement (Concept 53).

Old law: ECA, s.2(1): partial disablement, temporary or permanent, judged by the reduction in earning capacity.

Conclusion: partial means "less able to earn", not "unable to earn".

44. Total Disablement (CoSS s.2(56))

Exam importance: high

Meaning

Total disablement means that the injury makes the worker unable to do any of the work he could do before the accident.

Exam answer

1. Permanent total disablement (s.2(56)): disablement of a permanent nature that incapacitates an employee for all work which he was capable of performing at the time of the accident.
2. Deemed cases: permanent total disablement is deemed to result from
   • (a) every injury listed in Part I of the Fourth Schedule (for example, loss of both hands or of both eyes); or
   • (b) any combination of injuries listed in Part II, where the total percentage of loss of earning capacity reaches 100%.
3. Compensation: 60% of monthly wages × the relevant factor, or the notified amount, whichever is more (Concept 52).

Old law: ECA, s.2(1): total disablement, temporary or permanent.

Conclusion: total means "cannot work at all in the earlier line of work".

45. Temporary Disablement (CoSS s.2(83))

Exam importance: high

Meaning

Temporary disablement is a short-term condition after an injury. The worker needs treatment and cannot do his usual work for some time, but will recover.

Exam answer

1. Definition (s.2(83)): a condition resulting from an employment injury which requires medical treatment and renders an employee temporarily incapable of doing the work which he was doing before, or at the time of, the injury.
2. Total or partial: the Code pays compensation for temporary disablement "whether total or partial" (s.76(1)(d)).
3. Compensation: a half-monthly payment of 25% of monthly wages (Concept 54).

Old law: ECA, s.2(1): temporary partial and temporary total disablement.

Conclusion: temporary disablement gives income support while the worker recovers.

Partial, total and temporary disablement compared

Point	Permanent partial	Permanent total	Temporary
Section	s.2(55)	s.2(56)	s.2(83)
Effect on earning capacity	Reduced in every employment the worker could undertake at the time of the accident	Ended for all work the worker could perform at the time of the accident	Worker temporarily unable to do the work he was doing; needs medical treatment
Duration	Permanent	Permanent	For a limited time
Deemed cases	Each injury in Part II of the Fourth Schedule	Each injury in Part I; or Part II injuries totalling 100% loss	—
Compensation	A percentage of permanent total disablement compensation (Concept 53)	60% of monthly wages × relevant factor, or the notified amount, whichever is more (Concept 52)	Half-monthly payment of 25% of monthly wages, whether total or partial (Concept 54)

Case on the disablement definitions

46. Employer's Liability for Personal Injury (CoSS s.74)

Exam importance: high

Meaning

The employer must pay compensation when a worker suffers a personal injury by accident (or an occupational disease) arising out of and in the course of employment. Three questions decide liability:

1. Was there a personal injury?
2. Was it caused by an accident or an occupational disease?
3. Did it arise out of and in the course of the employment?

Exam answer

Section 74(1): if personal injury is caused to an employee by accident, or by an occupational disease listed in the Third Schedule, arising out of and in the course of his employment, the employer is liable to pay compensation.

1. Personal injury: includes death.
2. "Arising out of": there must be a cause-and-effect link between the job and the accident.
3. "In the course of": the accident must happen during the employment, at a place and in circumstances connected with the job (time, place and circumstances).
4. Breach of orders (s.74(2)): an accident is still treated as being in the course of employment even if the employee was acting against a law or an order, or without instructions, if
   • it would otherwise have been so; and
   • the act was done for the purpose of the employer's business.
5. Commuting (s.74(4)): an accident while going to or coming from work is deemed to be in the course of employment if there is a nexus between the circumstances, time and place of the accident and the employment.
6. Direct link (s.74(6)): otherwise, compensation is payable only if the accident or disease is directly attributable to a specific injury or disease arising out of and in the course of employment.
7. Exceptions: the employer's defences (Concept 48).

Old law: ECA, s.3(1)–(3).

Cases: see Concept 70.

Conclusion: liability is no-fault, but it is limited by the test of "arising out of and in the course of employment" and by the defences.

47. Notional Extension of Employer's Premises

Exam importance: high

Meaning

The general rule is that a worker's employment starts when he reaches the workplace and ends when he leaves it. Travel to and from work is normally outside the employment. Under the doctrine of "notional extension" ("notional" means imagined, or treated as if), the law in some cases treats the employer's premises as stretching a little in time and place, so that the worker is still "in the course of employment".

Exam answer

1. General rule: employment begins on reaching the place of work and ends on leaving it.
2. Extension: courts may extend the premises reasonably in time and space, for example while the worker is
   • entering or leaving the premises;
   • passing through the approach to the workplace;
   • using the employer's transport; or
   • doing something incidental to the job.
3. Limits:
   • The extension does not cover a worker who is simply a member of the public on a public road or a public ferry (Saurashtra Salt).
   • It does not cover a worker cycling to work on a public road one kilometre away (Francis De Costa).
   • It can apply where the worker uses the employer's transport, or a bus that he has a right to use as part of his job (BEST v. Agnes).
4. Position under the Code:
   • commuting accidents are now covered if a nexus with the employment is shown (s.74(4); for ESI, s.34(3)); and
   • an accident during an emergency rescue at the premises is also covered (s.34(2)).

Old law: ECA, s.3, read with case law.

Conclusion: the notional extension is limited, and needs a real link with the job.

Within and outside the notional extension

Situation	In the course of employment?	Authority
Entering or leaving the premises; passing through the approach to the workplace	Yes (reasonable extension in time and space)	General rule as extended by courts
Doing something incidental to the job	Yes	General rule as extended by courts
Travelling in the employer's transport, or in a bus the worker has a right to use as part of his job	Yes	BEST v. Agnes
Travelling as an ordinary member of the public on a public road or public ferry	No	Saurashtra Salt
Cycling to work on a public road one kilometre away	No	Francis De Costa
Commuting accident with a nexus to the employment	Yes, under the Code	CoSS s.74(4); for ESI, s.34(3)
Accident during an emergency rescue at the premises	Yes, under the Code	s.34(2)

Cases on notional extension

Full case notes appear in Concept 70. The points for which each case is cited under this topic are given below.

48. Defences Available to the Employer (CoSS Section 74(1) provisos, Section 74(6)–(7) and Section 84)

Exam importance: high

Even under a no-fault law, the employer has a few defences, that is, reasons why he need not pay compensation. These defences are meant to stop carelessness and misuse.

Model exam answer

The employer is not liable in the following cases:

1. Short disablement (Section 74(1)(a)): for an injury that does not cause total or partial disablement for more than three days.
2. Drink or drugs (Section 74(1)(b)(i)): where the accident is directly attributable to the employee being under the influence of drink or drugs.
3. Wilful disobedience (Section 74(1)(b)(ii)): wilful disobedience of an order expressly given, or of a safety rule expressly framed.
4. Wilful removal of a safety guard (Section 74(1)(b)(iii)): wilful removal or disregard of a safety guard or device which the employee knew had been provided.
5. Exception to defences 2–4: these defences are not available where the accident causes death or permanent total disablement.
6. No direct link (Section 74(6)): no compensation is payable unless the injury or disease is directly attributable to a specific accident or disease arising from the employment.
7. Civil suit filed (Section 74(7)): no compensation if the employee has already sued for damages.
8. Refusal of medical examination (Section 84): the right to compensation is suspended for the period of refusal or obstruction.

Defence	Provision	Available if the accident causes death or permanent total disablement?
Disablement for not more than three days	Section 74(1)(a)	Not applicable (the exception covers defences 2–4 only)
Drink or drugs	Section 74(1)(b)(i)	No
Wilful disobedience of an order or safety rule	Section 74(1)(b)(ii)	No
Wilful removal or disregard of a safety guard or device	Section 74(1)(b)(iii)	No

Old law: Employees' Compensation Act, 1923 (ECA), Section 3(1) provisos and Section 3(5).

Conclusion: the defences are few, and serious injury or death is always compensated.

49. Occupational Diseases (CoSS Sections 2(51), 74(3), 74(5) and 82)

Exam importance: high

Some diseases come slowly from a job, such as lung disease from dust, or lead poisoning. The law treats certain such diseases as if they were accidents.

Model exam answer

1. Definition (Section 2(51)): a disease specified in the Third Schedule as peculiar to the employment.
2. Deemed accident (Section 74(3)): if an employee in a job listed in the Second Schedule contracts a Third Schedule disease peculiar to that job while in one employer's service for a continuous period of at least six months, the disease is deemed to be an injury by accident. Unless the contrary is proved, it is treated as arising out of and in the course of employment.
3. Adding diseases (Section 74(5)): the Government may add employments or diseases after giving three months' notice.
4. Time of the accident (Section 82 provisos):
   • for such a disease, the accident is treated as happening on the first day of continuous absence from work;
   • for partial disablement without absence from work, the two-year claim period runs from the day notice of disablement is given;
   • if symptoms appear within two years after leaving the job, the accident is treated as happening on the day the symptoms were first detected.
5. Liability of the employer: liability is on the employer in whose service the employee last contracted the disease. The six-month rule protects against short-term jobs.

Old law: ECA, Sections 3(2)–(4); Schedule III (list of diseases).

Conclusion: a slow disease is treated like an accident when it clearly comes from the job.

50. Alternate Remedies (CoSS Sections 74(7), 41(7), 85 and 86)

Exam importance: medium

A worker injured at work may have more than one way to get money: compensation under the Code, a civil suit for damages, or ESI benefits. The law does not allow the worker to take them all; he must choose.

Model exam answer

1. Suit or compensation (Section 74(7)):
   • there is no right to compensation if the employee has already instituted a civil suit for damages; and
   • no suit is allowed if he has claimed compensation before the competent authority, or has an agreement for compensation under the Chapter.
2. ESI or compensation (Section 41(7)(a)): a person eligible for dependants' benefit or disablement benefit under the ESI Chapter cannot claim employee's compensation from the employer.
3. Contractor or principal employer (Section 85): the worker may claim from the principal employer, or from the contractor instead (Section 85(3)).
4. Third party (Section 86): if a stranger is legally liable to pay damages, the employer who has paid compensation is entitled to be indemnified by that stranger.

Choice before the worker	Rule	Provision
Compensation or civil suit	One excludes the other	Section 74(7)
Compensation or ESI	A person eligible for ESI dependants' or disablement benefit cannot claim compensation from the employer	Section 41(7)(a)
Principal employer or contractor	Claim against either	Section 85, Section 85(3)
Employer and a liable stranger	The employer who paid is indemnified by the stranger	Section 86

Old law: ECA, Section 3(5). For the ESI bar and the case of A. Trehan, see Concept 72.

Conclusion: one injury, one remedy: the worker chooses the best.

51. Compensation for Death (CoSS Section 76(1)(a) and (7))

Exam importance: high

If the injury causes death, the family gets a lump sum. It is worked out from the worker's monthly wages and a factor that depends on the worker's age.

Model exam answer

1. Amount (Section 76(1)(a)): 50% of the monthly wages of the deceased employee × the relevant factor, or an amount notified by the Central Government, whichever is more.
2. Relevant factor: the number in the Sixth Schedule matched to the employee's completed years of age on his last birthday before the compensation fell due. A younger worker has a higher factor, since more working years were lost.
3. Enhancement: the Central Government may increase the amounts by notification.
4. Funeral expenses (Section 76(7)): in addition, the employer must deposit not less than ₹15,000 (or the amount the State prescribes) with the competent authority, for the eldest surviving dependant or for the person who actually paid for the funeral.
5. Payment: by deposit with the competent authority, followed by distribution among the dependants (Concept 58).

Old law: ECA, Section 4(1)(a): 50% × factor, or ₹1,20,000, whichever is more.

Conclusion: the formula gives a bigger amount to a younger worker with higher wages.

52. Compensation for Permanent Total Disablement (CoSS Section 76(1)(b))

Exam importance: high

If the worker becomes permanently unable to do any work, the compensation is a little higher than in a case of death, because the worker is still alive and needs support.

Model exam answer

1. Amount: 60% of the monthly wages × the relevant factor, or the notified amount, whichever is more.
2. Deemed cases: injuries in Part I of the Fourth Schedule, or Part II injuries adding up to 100% loss of earning capacity (Section 2(56)).
3. Medical expenses: the employer reimburses the actual medical expenses (Section 76(5)).
4. Defences do not apply where the accident causes permanent total disablement (Section 74(1)(b)).

Old law: ECA, Section 4(1)(b): 60% × factor, or ₹1,40,000, whichever is more.

Conclusion: permanent total disablement gets a higher percentage (60%) than death (50%).

53. Compensation for Permanent Partial Disablement (CoSS Section 76(1)(c))

Exam importance: high

For partial disablement the worker gets a share of the permanent total disablement amount. The share equals the percentage of earning power lost.

Model exam answer

1. Injury listed in Part II of the Fourth Schedule (Section 76(1)(c)(i)): the percentage of loss of earning capacity shown in the Schedule, applied to the permanent total disablement compensation.
2. Injury not listed (Section 76(1)(c)(ii)): the percentage of loss of earning capacity as assessed by a medical practitioner, applied in the same way.
3. Several injuries in one accident (Explanation 1): the amounts are added, but the total cannot be more than the permanent total disablement amount.
4. Assessment (Explanation 2): the medical practitioner should take into account the percentages given in the Fourth Schedule for different injuries.

Old law: ECA, Section 4(1)(c).

Conclusion: the payment is in proportion to the loss.

54. Compensation for Temporary Disablement (CoSS Section 76(1)(d) and (4)–(6))

Exam importance: high

For temporary disablement, the worker gets regular payments (not a lump sum) twice a month while he recovers.

Model exam answer

1. Amount (Section 76(1)(d)): a half-monthly payment of 25% of the monthly wages, for temporary disablement, whether total or partial.
2. When payment starts (Section 76(4)):
   • if the disablement lasts 28 days or more: from the 16th day from the date of disablement;
   • if the disablement lasts less than 28 days: after a waiting period of three days.
3. How long: for as long as the disablement lasts, or five years, whichever is shorter.
4. Deductions and limit:
   • payments already made by the employer are deducted;
   • a half-monthly payment cannot be more than the difference between half of the wages before the accident and half of the wages after the accident.
5. Medical expenses (Section 76(5)): the employer reimburses the actual medical expenditure.
6. End of disablement (Section 76(6)): if the disablement ends before a half-monthly payment falls due, a proportionate sum is paid.

Duration of temporary disablement	Half-monthly payment begins
28 days or more	From the 16th day from the date of disablement
Less than 28 days	After a waiting period of three days

Old law: ECA, Section 4(1)(d): half-monthly payment of 25%, with a "waiting period" of 3 days.

Conclusion: the worker has a steady income during recovery.

55. Accident Outside India (CoSS Sections 2(28), 76(2), 83 and 92)

Exam importance: medium

Some workers work abroad or at sea. If they are injured outside India, the Code still protects them.

Model exam answer

1. Employment injury (Section 2(28)(ii)): for the compensation Chapter, an accident occurring, or an occupational disease contracted, within or outside India is covered.
2. Foreign compensation (Section 76(2)): the competent authority must reduce the amount by any compensation already awarded under the law of the foreign country.
3. Covered workers (Section 83):
   • masters and seamen of ships;
   • the captain and crew of aircraft;
   • persons recruited by Indian companies to work abroad;
   • persons sent abroad with motor vehicles registered in India (drivers, helpers, mechanics, cleaners).
4. Notice and claim:
   • notice may be served on the master, the captain, or the local agent of the company or owner (Section 83(2));
   • time limits for claims (Section 83(3)): for death, within one year after the news of the death reaches the claimant; if a ship or aircraft is lost with all hands, within 18 months.
5. Venue (Section 92): the competent authority of the area where the owner or agent resides or carries on business, or where the company's registered office is situated.

Old law: ECA, 1923 (special provisions for seamen, aircraft crew and workmen sent abroad).

Conclusion: workers are protected even beyond India's borders, without double payment.

56. Calculation of Compensation: The Factors

Exam importance: high

The amount of compensation depends on a few factors: the kind of injury, the monthly wages, the worker's age (the relevant factor) and the percentage of loss of earning capacity.

Model exam answer

Factor	Rule
Kind of injury	Death 50%; permanent total disablement 60%; permanent partial disablement = percentage loss × the permanent total disablement amount; temporary disablement = 25%, half-monthly (Section 76(1))
Monthly wages	Section 78 (Concept 41); the Government may notify a ceiling (Section 76(3))†
Relevant factor	Sixth Schedule: by the completed years of age; the younger the worker, the higher the factor
Percentage loss of earning capacity	Fourth Schedule (Parts I and II), or medical assessment
Minimum amounts	The notified minimum applies if it is higher (old law: ₹1,20,000 for death; ₹1,40,000 for permanent total disablement)
Extras	Medical expenses (Section 76(5)); funeral expenses of not less than ₹15,000 (Section 76(7))
Reductions	Payments already made by the employer (proviso to Section 76(4)); compensation received under foreign law (Section 76(2))

Old law: ECA, Section 4 and Schedules I, II and IV.

57. Payment of Compensation and Penalty for Default (CoSS Sections 77 and 133)

Exam importance: high

Compensation must be paid as soon as it falls due. If the employer delays without good reason, he pays interest and a penalty.

Model exam answer

1. Payment when due (Section 77(1)): compensation under Section 76 is to be paid as soon as it falls due.
2. Provisional payment (Section 77(2)): if the employer does not accept the full liability claimed, he must pay provisionally the amount he accepts (by depositing it with the competent authority or paying it to the employee), without prejudice to the further claim.
3. Default (Section 77(3)): if the employer is in default for more than one month from the due date, the competent authority orders:
   • interest at the prescribed rate; and
   • if there was no justification for the delay, a further sum (damages) of up to 50% of the arrears, after giving the employer an opportunity to show cause.
4. Who receives it (Section 77(4)): the interest and damages are paid to the employee or the dependant.
5. Offence (Section 133(h)): failure to pay compensation is punishable with a fine of up to ₹50,000; a second offence is punished more heavily (Section 134).

Old law: ECA, Section 4A: interest (12%) and a penalty of up to 50%.

Conclusion: the law punishes delay.

58. Distribution of Compensation (CoSS Section 81)

Exam importance: medium

Death compensation is not handed over by the employer directly to the family. It is deposited with the competent authority, who decides how to divide it among the dependants.

Model exam answer

1. Deposit (Section 81(1)): no payment of death compensation, and no payment of a lump sum to a woman or a person under legal disability, is valid unless it is made by deposit with the competent authority.
2. Advance: the employer may advance to a dependant up to three months' wages, which is later deducted.
3. Notice to dependants (Section 81(4)): the authority may publish or serve a notice calling the dependants to appear. If no dependant exists, the balance is returned to the employer.
4. Apportionment (Section 81(5)): the authority divides the sum among the dependants in such proportion as he thinks fit, or gives all of it to one dependant, after hearing them and recording reasons.
5. Protection (Section 81(7)–(8)): money due to a woman or a person under disability can be invested for her or his benefit; orders can be varied on account of neglect of children or a change in circumstances.
6. Fraud (Section 81(9)–(10)): amounts obtained by fraud can be recovered as an arrear of land revenue.

Old law: ECA, Sections 8–9.

Conclusion: the authority protects the family's share and stops misuse.

59. Notice and Claim (CoSS Section 82)

Exam importance: high

The employer should be told about the accident soon, and the claim must be filed within two years. These rules prevent stale claims.

Model exam answer

1. Rule (Section 82(1)): no claim is entertained unless:
   • notice of the accident has been given as soon as practicable; and
   • the claim is made within two years of the accident or, in a case of death, within two years of the death.
2. Contents and service (Section 82(3)): the notice gives the name and address of the injured person, the cause of the injury and the date of the accident. It is served on the employer, or on any one of several employers, or on the person responsible for the management of the branch.
3. Modes (Section 82(5)): by delivery, by registered post, electronically, or by an entry in the notice-book (Section 82(4) allows the Government to require a notice-book to be kept).
4. Occupational disease: special dates apply (Concept 49).

Old law: ECA, Section 10 (notice, and a claim within two years).

Conclusion: prompt notice and a two-year limit for claims keep the evidence fresh.

60. Exceptions to the General Rule of Notice and Claim (CoSS Section 82(2) and proviso)

Exam importance: medium

The notice-and-claim rule is strict, but the law relaxes it where the employer already knew about the accident or the delay is understandable.

Model exam answer

1. Defect not a bar (Section 82(2)): the want of notice, or any defect or irregularity in it, is no bar to the claim if:
   1. the claim is for the death of an employee resulting from an accident on the employer's premises (or at a place where he was working under the employer's control), and he died there, or without leaving the vicinity; or
   2. the employer (or a manager) had knowledge of the accident from another source at or about the time it happened.
2. Sufficient cause (proviso): the competent authority may entertain any claim even if notice was not given or the claim was made late, if satisfied that the failure was due to sufficient cause.
3. Other relaxations: special time limits for ships and aircraft (Section 83(3)); claims after a State certificate (Section 83(6)).

Old law: ECA, Section 10(2) and proviso.

Conclusion: the exceptions protect a genuine claimant from technical defeat.

61. Contracting Out (ECA Section 17; CoSS Sections 74(7), 85 and 89)

Exam importance: medium

"Contracting out" means an agreement by which the worker gives up his right to compensation. The old law declared such an agreement void. A worker cannot sign away a right that the law gives him.

Model exam answer

1. Old rule (ECA, Section 17): any contract or agreement by which a workman gives up his right to compensation is null and void in so far as it removes or reduces the employer's liability.
2. Registration of agreements (ECA, Sections 28–29; CoSS Section 89):
   • an agreed lump sum, or any settlement with a woman or a person under disability, must be recorded by the competent authority;
   • the authority may refuse to record it if the sum is inadequate, or if the agreement was obtained by fraud, undue influence or other improper means;
   • a recorded agreement is enforceable.
3. Position under the Code: Chapter VII does not appear to contain a separate "contracting out" clause. The same protection works through:
   • Section 89 (registration of agreements);
   • Section 74(7) (an agreement in accordance with the Chapter); and
   • Section 90 (the authority decides).
4. Section 85 ("Contracting") is different: it makes the principal employer liable for a contractor's workers. It has nothing to do with contracting out.
5. Case: Roshan Deen v. Preeti Lal (2002).

Conclusion: the worker's right to compensation cannot be bought out cheaply.

Module IV: Code on Social Security, 2020: Insurance, Retirement and Welfare Benefits

• Insurance: a system in which many people pay small amounts so that those who suffer a loss are paid.
• Retirement benefits: money for the time after work.

Part A: Employees' State Insurance (ESI), CoSS Chapter IV (Sections 24–52)

62. ESI: Applicability (CoSS Section 1(7)–(8) and the First Schedule)

Exam importance: high

ESI is a health and cash-benefit insurance for workers and their families. It pays for sickness, maternity, work injury and death. The Code says which workplaces are covered.

Model exam answer

1. Main rule (First Schedule): Chapter IV applies to every establishment in which ten or more persons are employed, other than a seasonal factory.
2. Hazardous work: it also applies to an establishment carrying on a hazardous or life-threatening occupation notified by the Central Government, even if only one employee is employed.
3. Plantations: a plantation employer may opt in if the ESI benefits are better than the benefits he provides.
4. Voluntary extension (Section 1(7)): the Director General of the Corporation may apply the Chapter to an establishment if the employer and the majority of employees agree.
5. Continued application (Section 1(8)): once applied, the Chapter continues to apply even if the number of employees later falls below the threshold.
6. Who is covered: employees drawing wages up to the wage ceiling notified by the Central Government (₹21,000 a month under the present rules†). For counting the number of employees, those above the ceiling are also counted (Section 2(26), second proviso).
7. Start of contributions: contributions become payable from the date (notified) on which the Corporation starts giving benefits.

Point	Old law: ESI Act, 1948	CoSS, Chapter IV
Basic coverage	Factories using power with 10 or more persons (Sections 1–2)	Every establishment with 10 or more persons, other than a seasonal factory
Other establishments	Establishments notified by the State	Hazardous or life-threatening occupations notified by the Central Government, even with one employee; voluntary extension by agreement (Section 1(7)); plantations may opt in

Conclusion: the Code makes ESI universal for all establishments with 10 or more employees, and brings dangerous work in from the first worker.

63. Employer, Employee and Insured Person (CoSS Sections 2(26), 2(27), 2(39) and 28)

Exam importance: high

Under ESI, the employer pays the contributions, the employee is covered, and the covered employee is called an Insured Person.

Model exam answer

1. Employer (Section 2(27)):
   • the person in control of the establishment: the occupier of a factory, the owner or manager, or the head of a Government department;
   • it also includes a contractor and the legal representative of a dead employer (see Concept 40);
   • for ESI, the employer pays both contributions for every employee, including those brought by a contractor (Section 31(1)).
2. Employee (Section 2(26)): any person employed on wages, directly or through a contractor.
   • For Chapter IV (ESI), he must draw wages up to the wage ceiling (proviso 1).
   • Persons above the ceiling are still counted for deciding whether the establishment is covered (proviso 2).
3. Insured Person (Section 28): every employee in an establishment to which the Chapter applies shall be insured. An employee, insured or insurable, for whom contributions are or were payable, and who is entitled to benefits, is called an "Insured Person".
4. Contract workers: they are covered. The principal employer pays and then recovers from the contractor (Section 31(6)).

Old law: ESI Act, Section 2 (definitions of "employee" in Section 2(9) and "insured person" in Section 2(14)); the ESIC is set up and constituted under Sections 3–4.

Conclusion: every eligible worker is insured, whoever the immediate employer is.

64. Authorities under the ESI Chapter (CoSS Sections 5, 24, 37 and 48)

Exam importance: medium

Several bodies run ESI: the Corporation that manages the scheme, its officers, doctors' boards that decide disability, and special courts for disputes.

Model exam answer

1. Employees' State Insurance Corporation (ESIC) (Section 5): constituted by the Central Government. Its members include:
   • a Chairperson and a Vice-Chairperson;
   • up to five Central Government officials;
   • a representative of each State and one for the Union territories;
   • ten employers' representatives and ten employees' representatives;
   • two doctors' representatives;
   • others.
2. Standing Committee (Section 5(3)): chosen from the Corporation to run day-to-day work. It authorises the officers who operate the Fund's account.
3. Director General (Section 24): the principal officer. There are other officers too, for example the Insurance Commissioner and the Chief Medical Commissioner.
4. Medical Board and Medical Appeal Tribunal (Section 37): decide the "disablement question", that is, whether disablement is permanent and the extent of loss of earning capacity.
5. Employees' Insurance Court (Section 48): decides disputes (see Concept 73).
6. Inspector-cum-Facilitator (Section 122): for inspection and guidance.

Authority	Section	Role
ESI Corporation	5	Runs the scheme
Standing Committee	5(3)	Day-to-day work; authorises officers who operate the Fund's account
Director General and other officers	24	Principal officer and staff
Medical Board and Medical Appeal Tribunal	37	Decide the disablement question
Employees' Insurance Court	48	Decides disputes
Inspector-cum-Facilitator	122	Inspection and guidance

Old law: ESI Act, 1948: ESIC constitution (Sections 3–4) and the Employees' Insurance Court.

Conclusion: a Corporation runs the scheme; boards and courts settle medical and legal disputes.

65. ESI Fund (CoSS Sections 25–26)

Exam importance: medium

All contributions and other money go into one fund, and the Fund can be used only for listed purposes.

Model exam answer

1. Fund (Section 25): all contributions and user charges paid under the Chapter, and all other money received for the Corporation, are paid into the Employees' State Insurance Fund, which is held and administered by the Corporation.
2. Other sources: grants, donations, CSR funds and gifts from the Government, local authorities or any person.
3. Deposit and investment: the money is kept in banks approved by the Central Government and invested as prescribed. The account is operated by officers authorised by the Standing Committee.
4. Uses (Section 26):
   • payment of benefits and medical treatment;
   • salaries and expenses of the Corporation;
   • hospitals and dispensaries;
   • payments to States or private bodies for medical care;
   • audit;
   • the cost of Employees' Insurance Courts;
   • legal costs;
   • health and welfare measures and rehabilitation of disabled workers;
   • other purposes approved by the Corporation with the Central Government's approval.
5. Priority (Section 47): dues to the Corporation are a first charge on the assets of the establishment.

Old law: ESI Act, 1948, Sections 26–28 (as the course outline lists them).

Conclusion: the Fund is a protected pool for workers' benefits.

66. Contributions: Employer and Employee (CoSS Sections 29 and 31)

Exam importance: high

ESI is paid for by contributions from the employer and the employee, calculated as a percentage of wages.

Model exam answer

1. Two shares (Section 29(1)): the employer's contribution and the employee's contribution, both paid to the Corporation.
2. Rates (Section 29(2)): as prescribed by the Central Government. At present: employer 3.25% and employee 0.75% of wages (4% in all)†. Workers earning up to ₹176 a day are exempt from their own share†.
3. Due date (Section 29(4)): ordinarily the last day of the wage period.
4. Employer's duty (Section 31):
   • the employer pays both shares for every employee, including contract workers (Section 31(1));
   • he can recover the employee's share only by deduction from wages, and only for the period concerned (Section 31(2));
   • he cannot deduct the employer's share from wages (Section 31(3));
   • sums deducted are treated as entrusted to him (Section 31(4));
   • he bears the cost of remitting the money (Section 31(5));
   • he may recover from a contractor, who keeps a register (Section 31(6)–(8)).
5. New provisions expanding coverage:
   • hazardous units are covered even with one worker;
   • plantations may opt in;
   • voluntary extension (Section 1(7));
   • contract workers are covered;
   • the Code also allows schemes for unorganised, gig and platform workers (Chapter IX).
6. Default:
   • dues are a first charge on assets (Section 47);
   • failing to pay contributions is an offence (Section 133(a)): imprisonment up to three years (at least one year if the employee's share was deducted but not paid), with fine.

	Employer's share	Employee's share
Present rate†	3.25% of wages	0.75% of wages
Who pays it to the Corporation	Employer	Employer
Can it be deducted from wages?	No (Section 31(3))	Yes, only by deduction from wages for the period concerned (Section 31(2))

Old law: ESI Act, 1948, Sections 38–40 (the course outline gives Sections 26–28, which deal with the ESI Fund).

Conclusion: contribution rates are set by rules, but the duty to pay is on the employer.

67. Sickness Benefit and Maternity Benefit (CoSS Sections 32(1)(a)–(b) and 41(4))

Exam importance: high

When an insured person is sick and cannot work, ESI pays part of the wages. When an insured woman has a baby, ESI pays maternity benefit.

Model exam answer

1. Sickness benefit (Section 32(1)(a)): periodical payments to an insured person during sickness certified by a duly appointed medical practitioner.
2. Maternity benefit (Section 32(1)(b)): periodical payments to an insured woman for confinement, miscarriage or sickness arising out of pregnancy, on a certificate by the authority named in the regulations.
3. Qualifications, rate and period (Section 32(3)): decided by the Central Government's rules. At present:
   • sickness benefit is about 70% of the average daily wage for up to about 91 days in a year†;
   • maternity benefit is 100% of the wage for 26 weeks†.
4. Not together (Section 41(4)): an insured person cannot get, for the same period:
   • sickness benefit and maternity benefit;
   • sickness benefit and temporary disablement benefit;
   • maternity benefit and temporary disablement benefit.
   He or she may choose between them (Section 41(5)).
5. No double claim (Section 41(7)(b)): a woman eligible for ESI maternity benefit cannot claim maternity benefit from the employer under Chapter VI.
6. No cash for working days (Section 41(2)): no sickness or temporary disablement benefit is payable for a day on which the person works, is on paid leave or holiday, or is on strike.

	Sickness benefit	Maternity benefit
Section	32(1)(a)	32(1)(b)
Who	Insured person	Insured woman
When	Sickness certified by a duly appointed medical practitioner	Confinement, miscarriage or sickness arising out of pregnancy, certified by the authority in the regulations
Present rate and period†	About 70% of the average daily wage, up to about 91 days a year	100% of the wage for 26 weeks

Old law: ESI Act, Sections 46–50.

Conclusion: ESI gives money in sickness and maternity, but only one benefit at a time.

68. Dependants' Benefit and Disablement Benefit (CoSS Sections 32(1)(c)–(d), 37 and 41(1))

Exam importance: high

If a work injury disables an insured person, ESI pays a monthly benefit. If the injury kills him, ESI pays a monthly benefit to his dependants.

Model exam answer

1. Disablement benefit (Section 32(1)(c)): periodical payments to an insured person disabled by an employment injury, certified as eligible by the authority named in the regulations. It can be temporary or permanent.
2. Medical Board (Section 37): decides:
   • whether the disablement is permanent;
   • the extent of loss of earning capacity;
   • whether the assessment is provisional or final.
   Its decisions can be reviewed for fresh evidence or aggravation.
3. Dependants' benefit (Section 32(1)(d)): periodical payments to the dependants (defined in Section 2(24)) of an insured person who dies of an employment injury.
4. Rates (Section 32(3)): decided by rules. At present about 90% of the average daily wage for temporary and permanent total disablement, and the same rate as a pension for dependants†.
5. No lump sum (Section 41(1)): disablement benefit cannot be commuted (exchanged) for a lump sum, except as the regulations allow.
6. Bar on compensation (Section 41(7)(a)): a person eligible for these benefits cannot claim employee's compensation under Chapter VII.

	Disablement benefit	Dependants' benefit
Section	32(1)(c)	32(1)(d)
Event	Insured person disabled by an employment injury (temporary or permanent)	Insured person dies of an employment injury
Paid to	The insured person	The dependants (Section 2(24))
Present rate†	About 90% of the average daily wage (temporary and permanent total disablement)	The same rate, as a pension

Old law: ESI Act, 1948, Sections 51 (disablement benefit), 52 (dependants' benefit) and 54–55A (medical boards and review) (the course outline lists Sections 51A, 55, 56 and 57).

Conclusion: ESI gives a regular income for injury and death, and replaces the employer's compensation.

69. Medical Benefit and Funeral Benefit (CoSS Sections 32(1)(e)–(f), 32(2) and 40)

Exam importance: medium

ESI gives full medical care to the insured person, and it can also extend this care to the family. If the insured person dies, ESI gives a sum for the funeral.

Model exam answer

1. Medical benefit (Section 32(1)(e)): medical treatment and attendance for insured persons. The State Government provides it (Section 40), or the Corporation provides it where notified.
2. Family (Section 32(2)): the Corporation may extend medical benefit to the family of an insured person.
3. Funeral expenses (Section 32(1)(f)):
   • paid to the eldest surviving member of the family of a dead insured person, or, if there is no family, to the person who actually incurs the funeral cost;
   • the amount is limited to a sum prescribed by the Central Government (₹15,000 at present†);
   • the claim must be made within three months of the death (an extension is allowed).
4. Health promotion (Section 33): the Corporation may spend from the Fund on health, welfare and rehabilitation of disabled workers.

	Medical benefit	Funeral expenses
Section	32(1)(e), 32(2), 40	32(1)(f)
What	Medical treatment and attendance	Payment towards the funeral cost, up to the prescribed sum (₹15,000 at present†)
For whom	Insured person; may be extended to the family	Eldest surviving family member, or else the person who actually incurs the cost
Provided by / time limit	State Government, or the Corporation where notified	Claim within three months of death (extension allowed)

Old law: ESI Act, 1948, Section 46(1)(e) and Sections 56–59 (medical benefit) and Section 46(1)(f) (funeral expenses) (the course outline lists Sections 55–57).

Conclusion: health care and a dignified funeral are part of social security.

70. "Arising Out of" and "In the Course of" Employment (CoSS Sections 2(28) and 34–36)

Exam importance: high

ESI benefits for injury are paid only when there is an "employment injury", that is, an accident or occupational disease arising out of and in the course of employment. Both limbs (parts) of the phrase must be satisfied.

Model exam answer

1. Meaning of the phrase (case law):
   • "arising out of" needs a causal link between the job and the accident;
   • "in the course of" refers to time, place and circumstances.
2. General rule: employment begins when the employee reaches the place of work and ends when he leaves it. Journeys to and from work are outside it, except in cases of notional extension (see Concept 47).
3. Statutory help to the worker: see the table below.
4. Same test under both laws: the test applies alike under the Code and the old ESI Act (as the course outline notes).

Statutory help	Section
An accident in the course of employment is presumed to arise out of it	34(1)
An accident while taking steps in an emergency rescue at the premises	34(2)
Commuting with a nexus to employment	34(3)
Travelling as a passenger in a vehicle provided or arranged by the employer	34(4)
Acting in breach of law or orders, for the employer's business	35
Occupational disease listed in Part A, B or C of the Third Schedule	36

Conclusion: the commuting rule, first added to the ESI Act as Section 51E in 2010 and now carried into the Code as Section 34(3), reverses the strict approach taken in Francis De Costa.

Cases

Saurashtra Salt Manufacturing Co. v. Bai Valu Raja

General Manager, B.E.S.T. Undertaking, Bombay v. Mrs. Agnes

Regional Director, ESIC v. L. Ranga Rao

Regional Director, ESI Corporation v. Francis De Costa

Regional Director, ESI Corporation v. Batulbibi ⚠

The commuting cases compared

Case	Journey	Result	Reason
Saurashtra Salt (SC, 1958)	Public ferry across a creek to the works	Not in the course of employment	Workmen used public transport like ordinary members of the public; notional extension does not reach public routes
B.E.S.T. v. Agnes (SC, majority)	Driver going home in another BEST bus after his shift	Arose out of and in the course of employment	Free travel as of right was an implied part of the job; buses treated like the employer's premises
L. Ranga Rao (Karnataka High Court)	On the way to join duty; run over on a national highway about 2 km from the factory	Dependants entitled†	Liberal view: choice of route and mode; greater latitude in growing towns
Francis De Costa (SC, larger bench, 1996)	Cycling to work on a public road, 1 km from the factory	Not an employment injury	Employment begins only on reaching the place of employment; both limbs must be proved

71. Presumptions (CoSS Sections 34(1) and 36(1); ESI Act Section 51A)

Exam importance: high

A presumption (an assumption the law allows) helps the worker. Once he shows that the accident happened in the course of employment, the law assumes that it also arose out of employment, unless the other side proves otherwise.

Model exam answer

1. Accident (Section 34(1)): for Chapter IV, an accident arising in the course of an employee's employment is presumed, in the absence of evidence to the contrary, to have arisen out of that employment.
2. Occupational disease (Section 36(1)): if an employee in an employment listed in the Third Schedule contracts the disease listed against it, the disease is deemed an employment injury, unless the contrary is proved. The service needed depends on the Part of the Schedule (see the table below).
3. Effect: the burden of proof shifts to the Corporation or the employer.
4. Limits:
   • under Section 36(3), the presumption in Section 34(1) does not apply to occupational diseases;
   • save as provided, no benefit is payable for a disease unless it is directly attributable to a specific injury by accident (Section 36(2)).
5. Related presumptions: an emergency rescue (Section 34(2)), commuting with a nexus (Section 34(3)), and travel in the employer's vehicle (Section 34(4)).

Third Schedule	Service needed for the deeming rule
Part A	No period of service needed
Part B	Six months' continuous service
Part C	A period fixed by regulations

Old law: ESI Act, Section 51A (presumption as to an accident arising in the course of employment).

Conclusion: the presumption makes proof easier for the worker.

72. Bar on Receipt of Benefits (CoSS Section 41(4) and (7); ESI Act Section 53)

Exam importance: high

An insured worker cannot collect twice for the same injury. If he is entitled to ESI benefits, he cannot also claim employee's compensation from the employer, and an insured woman cannot also claim maternity benefit from the employer.

Model exam answer

1. Compensation (Section 41(7)(a)): a person eligible for dependants' benefit or disablement benefit under the ESI Chapter shall not be entitled to claim employee's compensation from the employer under Chapter VII.
2. Maternity (Section 41(7)(b)): a woman eligible for maternity benefit under the ESI Chapter cannot claim maternity benefit from her employer under Chapter VI.
3. Same period (Section 41(4)): no sickness plus maternity benefit, sickness plus temporary disablement benefit, or maternity plus temporary disablement benefit together.
4. Wrongful benefit (Section 41(8)): a person who received a benefit to which he was not entitled must repay it.
5. Old law: ESI Act, Section 53 barred a claim for compensation or damages under the Workmen's Compensation Act or any other law for an employment injury.
6. Case: A. Trehan v. Associated Electrical Agencies (below).

Bar	Section	Effect
On employee's compensation	41(7)(a)	A person eligible for dependants' or disablement benefit cannot claim compensation under Chapter VII
On employer's maternity benefit	41(7)(b)	A woman eligible for ESI maternity benefit cannot claim it from her employer under Chapter VI
On overlapping benefits	41(4)	No two of sickness, maternity and temporary disablement benefit for the same period
On wrongful benefit	41(8)	A benefit received without entitlement must be repaid
Old law	ESI Act, 53	No compensation or damages under the Workmen's Compensation Act or any other law for an employment injury

Conclusion: one injury, one system. ESI replaces the employer's liability for covered workers.

Case

73. Employees' Insurance Courts (CoSS Sections 48–52)

Exam importance: high

Disputes about ESI are not decided by the ordinary civil courts. They are decided by special Employees' Insurance Courts (EI Courts).

Model exam answer

1. Constitution (Section 48): the State Government constitutes an Employees' Insurance Court for a local area. A person who is or was a judicial officer, or a legal practitioner of five years' standing, can be its Judge.
2. Matters decided (Section 49(1)):
   • whether a person is an employee, or is liable to pay contribution;
   • the rate of wages or of contribution;
   • who is the employer;
   • the right to any benefit, and its amount and duration;
   • disputes between the employer and the Corporation, or between the employer and a contractor;
   • recovery of contributions, or of benefits wrongly received;
   • similar claims.
3. Deposit (Section 49(2)): an employer cannot raise a dispute about dues unless he deposits 50% of the amount the Corporation claims. The Court may waive or reduce the deposit, giving reasons.
4. Bar on civil courts (Section 49(3)): civil courts have no jurisdiction over these matters.
5. Powers (Section 50): the EI Court has the powers of a civil court to summon witnesses, take evidence and order production of documents. Its orders are enforced as a decree.
6. Limitation (Section 51): three years from the date on which the cause of action arises.
7. Appeal (Section 52): to the High Court, only on a substantial question of law, within 60 days. Sections 5 and 12 of the Limitation Act apply.

Old law: ESI Act, 1948 (the Employees' Insurance Court and the appeal to the High Court).

Conclusion: a special forum gives quick, expert justice on ESI matters.

Part B: Gratuity (CoSS Chapter V, Sections 53–58)

74. Gratuity: Applicability and When Payable (CoSS Section 53(1), First Schedule)

Exam importance: high

Gratuity is a lump sum that the employer pays when a long-serving employee leaves the job. The Code says where it applies and when it becomes payable.

Model exam answer

1. Establishments covered (First Schedule):
   • every factory, mine, oilfield, plantation, port and railway company;
   • every shop or establishment with ten or more employees on any day of the preceding twelve months;
   • others that the Government notifies.
2. When payable (Section 53(1)): on termination of employment after continuous service of at least five years:
   • (a) on superannuation (reaching the retirement age);
   • (b) on retirement or resignation;
   • (c) on death or disablement due to accident or disease;
   • (d) on the end of a fixed-term contract;
   • (e) on events notified by the Centre.
3. Exceptions to the five-year rule: five years' service is not needed on death, disablement, expiry of fixed-term employment or notified events. For working journalists, the period is three years.
4. On death: gratuity is paid to the nominee, or to the heirs if there is no nomination. A minor's share is deposited and invested until the minor attains majority.
5. Better terms (Section 53(5)): better terms of gratuity under a contract or an award are not affected.
6. Not covered: Government employees governed by their own gratuity rules (Explanation 1).

Event ending the employment, or class of employee	Minimum continuous service needed
Superannuation	Five years
Retirement or resignation	Five years
Death or disablement due to accident or disease	Not needed
End of a fixed-term contract	Not needed
Event notified by the Centre	Not needed
Working journalist	Three years

Old law: PoG Act, 1972 (the five-year rule; fixed-term employees were not clearly covered).

Conclusion: gratuity is a right earned after long service, and the Code adds fixed-term employees.

75. Continuous Service and "Completion of One Year of Service" (CoSS Sections 2(17) and 54)

Exam importance: high

The five-year rule counts continuous service. The Code provides that some breaks, such as sickness, leave, lay-off or strike, do not break the service.

Model exam answer

1. Completed year of service (Section 2(17)): continuous service for twelve months.
2. Continuous service (Section 54(A)): uninterrupted service, including service interrupted by:
   • sickness, accident or leave;
   • absence without leave, unless it is treated as a break in service under the standing orders;
   • lay-off, strike or lock-out;
   • cessation of work not due to the employee's fault.
3. Deemed continuous service (Section 54(B) and (C)): service is deemed continuous if the employee actually worked at least the days shown below.

   Deemed continuous for	Days actually worked (ordinary case)	Days actually worked (below ground in a mine, or an establishment working fewer than six days a week)
   One year (Section 54(B)(a)), counting the preceding 12 months	At least 240 days	At least 190 days
   Six months (Section 54(B)(b))	At least 120 days	At least 95 days
   Seasonal establishment (Section 54(C))	At least 75% of the days on which the establishment operated	No separate figure

4. Days counted as days worked:
   • days of lay-off;
   • paid leave earned in the previous year;
   • absence due to temporary disablement caused by accident;
   • maternity leave up to 26 weeks.
5. Nomination (Section 55): every employee who has completed one year of service must make a nomination.

Old law: PoG Act, Section 2A (240 and 190 days).

Conclusion: blameless breaks do not cancel the service.

76. Calculation of Gratuity: Formula and Ceiling (CoSS Section 53(2)–(4))

Exam importance: high

Gratuity is worked out by a fixed formula from the last drawn wages and the years of service, and it has a top limit.

Model exam answer

1. Rate (Section 53(2)): 15 days' wages for every completed year of service, or part of a year in excess of six months, based on the last drawn wages.
2. How the wages are taken for different employees:

   Employee	Rule
   Monthly-rated employee (Explanation 3)	15 days' wages = monthly wages ÷ 26 × 15
   Piece-rated employee	Daily wages = average of the last three months' wages, without overtime
   Employee in a seasonal establishment	Seven days' wages for each season
   Fixed-term employee, or employee who has died	Paid pro rata (in proportion to the service)
   Disabled employee (Section 53(4))	If he worked on reduced wages after the disablement, the wages before the disablement are used for the earlier period

3. Ceiling (Section 53(3)): the amount cannot exceed the amount notified by the Centre (₹20 lakh under the old Act since 2018; earlier ₹10 lakh†).

Old law: PoG Act, Section 4 (the ceiling was revised many times).

Conclusion: a clear formula gives certainty.

77. Forfeiture of Gratuity (CoSS Section 53(6))

Exam importance: high

Forfeiture means losing something as a punishment. An employee loses all or part of his gratuity if he is dismissed for serious wrongdoing.

Model exam answer

Ground on which service is terminated	Provision	Extent of forfeiture
An act, wilful omission or negligence causing damage, loss or destruction of the employer's property	Section 53(6)(a)	To the extent of the damage or loss
Riotous or disorderly conduct, or violence	Section 53(6)(b)(i)	Wholly or partly
An act that is an offence involving moral turpitude (a serious wrong), committed in the course of employment	Section 53(6)(b)(ii)	Wholly or partly

• Limit: gratuity can be forfeited only for the listed causes, and the termination must be for those causes.

Old law: PoG Act, Section 4(6).

Conclusion: serious misconduct costs the employee gratuity, but only to the extent the law allows.

78. Compulsory Insurance and Determination of the Amount (CoSS Sections 55–57)

Exam importance: medium

Employers must be able to pay gratuity when it falls due, so the Code makes them insure their gratuity liability. It also lays down a simple process to fix and pay the amount.

Model exam answer

Compulsory insurance

1. Duty to insure (Section 57): from a notified date, every employer (except the Government) must insure his gratuity liability with an IRDAI-regulated insurer, or, with exemption, run an approved gratuity fund.
2. An employer with 500 or more persons can be exempted if he sets up an approved fund.
3. The employer must be registered with the competent authority.
4. Failure (Section 57(5)): if he fails to pay the premium or the contributions to the fund, he must pay the gratuity himself, with interest, at once.

Determination and payment

1. Determination (Section 56): the employee (or a person authorised by him) applies. Even without an application, the employer determines the amount and gives notice to the person entitled and to the competent authority.
2. Payment: within 30 days. Delay carries simple interest, except where the delay was the employee's fault.
3. Dispute (Section 56(5)): the employer deposits the admitted amount, and the competent authority decides the dispute, with the powers of a civil court.
4. Appeal (Section 56(8)): within 60 days, which can be extended by another 60 days. An employer who appeals must deposit the amount required.

Offence

• Section 133(g): failing to pay gratuity is punishable with imprisonment up to one year, or fine up to ₹50,000, or both.

Old law: PoG Act, Sections 4A and 7.

Conclusion: insurance and a time limit make gratuity dependable.

Part C: Provident Fund (CoSS Chapter III, Sections 14–23)

Concepts 79 to 82 cover the Provident Fund chapter of the CoSS: coverage, the schemes, contributions, pension, insurance and transfer of accounts.

79. Provident Fund: Applicability and Schemes (CoSS Sections 1(4)–(5), 15, 20–21, First Schedule)

Exam importance: high

The Provident Fund is a savings scheme for retirement. The employee and the employer both pay a share of the wages into it every month. The Code sets up three schemes.

Model exam answer

1. Applicability (First Schedule): every establishment in which twenty or more employees are employed. If the employer and the majority of the employees agree, the Provident Fund Commissioner can extend it to other establishments (Section 1(5)).
2. Schemes (Section 15(1)): the Centre may frame:
   • (a) the Employees' Provident Fund Scheme;
   • (b) the Employees' Pension Scheme;
   • (c) the Employees' Deposit Linked Insurance Scheme (EDLI);
   • (d) other schemes for self-employed workers or any class of persons.
3. Not applicable (Section 20): for example, to co-operative societies with fewer than 50 persons working without power; to Government establishments having their own PF or pension; and to employees already getting PF under another law. The Government may exempt classes of establishments.
4. Own accounts (Section 21): an establishment with 100 or more persons may, with the Centre's authority, maintain its own PF accounts.
5. Recognised fund and priority (Sections 18–19): the PF is a recognised fund for income tax, and PF dues are a first charge on the assets.
6. Appeal (Section 23): lies to the Tribunal against assessment and damages, with a deposit by the employer.

Old law: EPF Act, 1952 and its schemes (EPS, 1995 and EDLIS, 1976).

Conclusion: the Code keeps the three schemes and allows new ones for unorganised workers.

80. "Employee" under the PF Chapter and EPF Contributions (CoSS Sections 2(26), 16(1)(a) and 17)

Exam importance: high

The PF chapter uses the general meaning of "employee", with a special rule about the wage ceiling. The contribution is a fixed percentage of wages, paid equally by both sides.

Model exam answer

1. Employee (Section 2(26)): for Chapter III, "employee" means a person drawing wages up to the wage ceiling, except in the case of the Employees' Provident Fund Scheme, where the ceiling does not limit membership (first proviso). Employees above the ceiling are still counted in deciding whether the establishment is covered (second proviso).
2. Contributions:

   Head	Provision	Who pays	Rate
   Provident Fund	Section 16(1)(a)	Employer	10% of wages; 12% for notified classes
   Provident Fund	Section 16(1)(a)	Employee	An equal amount. The employee may pay more, but the employer need not.
   Pension Fund	Section 16(1)(b)	Out of the employer's contribution	Up to 8⅓% of wages
   Insurance Fund (EDLI)	Section 16(1)(c)	Employer	Up to 1% of wages, plus administrative charges

3. Contractors (Section 17): the employer can recover the PF contribution from the contractor. The contractor may recover the employee's share from the employee's wages, but not the employer's share.
4. Wages here follow the CoSS definition (see Concept 41).

Old law: EPF Act, Section 6 (contributions).

Conclusion: both sides share equally; the employer's share also pays for pension and insurance.

Leading cases on higher pension

Change made by the 2014 amendment	Earlier position	Decision in Sunil Kumar B.
Pensionable salary capped at ₹15,000	₹6,500	Upheld
Pension on the average of the last 60 months	Average of 12 months	Upheld
Extra contribution of 1.16% of salary above ₹15,000 for pension on a higher salary	New requirement	Invalid (beyond the EPF Act)

81. Pension Scheme and EDLI (CoSS Sections 15(1)(b)–(c) and 16(1)(b)–(c))

Exam importance: high

The Pension Scheme gives a monthly income after retirement, and to the family after death. EDLI is a life-insurance cover linked to the PF deposit.

Model exam answer

1. Employees' Pension Scheme (Section 15(1)(b)) provides:
   • superannuation pension, retiring pension and permanent total disablement pension;
   • widow or widower's pension, children pension and orphan pension;
   • nominee pension.
2. Pension Fund (Section 16(1)(b)): the money comes from the employer's contribution (up to 8⅓% of wages) and other sums. The Fund is held and run by the Central Board.
3. EDLI (Section 15(1)(c)): a life insurance benefit to the family of an employee who dies.
4. Insurance Fund (Section 16(1)(c)): the employer pays up to 1% of wages, plus up to one-fourth extra for administration.
5. Continuity: the existing EPS, 1995 and EDLIS, 1976 continue for a period under the repeal clause (Section 164(2)(b)).

Point	Pension Scheme	EDLI
Provision for the scheme	Section 15(1)(b)	Section 15(1)(c)
Fund	Pension Fund (Section 16(1)(b))	Insurance Fund (Section 16(1)(c))
Employer's payment	Up to 8⅓% of wages, out of the employer's contribution	Up to 1% of wages, plus up to one-fourth extra for administration
Benefit	Monthly pension after retirement; pensions to the family after death	Life insurance amount to the family of an employee who dies
Old scheme	EPS, 1995	EDLIS, 1976

Old law: EPS, 1995 and EDLIS, 1976 under the EPF Act.

Conclusion: pension and insurance give security after retirement and after death.

82. Transfer of Accounts and Social Security for the Unorganised Sector through PF (CoSS Sections 15(1)(d) and 22)

Exam importance: medium

When a worker changes jobs, his PF money should follow him. The PF system can also be used to run schemes for people who are not in regular jobs.

Model exam answer

1. Transfer (Section 22): where an employee of a covered establishment leaves and joins any other establishment (covered or not), or an employee of an uncovered establishment joins a covered one, his accumulated PF and pension amounts are transferred as provided in the PF or Pension Scheme.
2. Other schemes (Section 15(1)(d)): the Centre may frame other schemes to give social security benefits to self-employed workers or any other class of persons through the same machinery.
3. Modification (Section 15(1)(e)): the schemes can be changed, prospectively or retrospectively.

Old law: EPF Act (transfer rules in the Scheme); EPS, 1995 and EDLIS, 1976.

Conclusion: portability of PF protects the worker who moves.

Part D: Other Welfare

Concepts 83 and 84 cover the welfare of building and construction workers, and of beedi, cigar and cine workers.

83. Building and Other Construction Workers: Benefits, Cess and Welfare Fund (CoSS Sections 100–108)

Exam importance: high

Construction workers move from site to site and have no steady employer. So the law charges a cess (a special tax) on the cost of construction and uses it for their welfare.

Model exam answer

The cess

1. Levy (Section 100): a cess of not more than 2% and not less than 1% of the cost of construction (excluding the cost of land and compensation under Chapter VII) is collected from every employer doing building or other construction work.
2. Collection: in advance through the local authority, or by deduction at source for Government or public-sector work.
3. Interest and self-assessment (Sections 101 and 103): interest is payable on delay. The employer pays the cess and files a return within 60 days of completion.
4. Penalty (Section 104): for non-payment, up to the amount of the cess. Appeal: Section 105.
5. Exemption (Section 102): where the State already levies a similar cess.

Beneficiaries

1. Registration (Sections 106–107): every building worker aged 18 to 60 who has worked for at least 90 days in the preceding 12 months is registered as a beneficiary.
2. Ceasing to be a beneficiary: at the age of 60, or if he works fewer than 90 days in a year. Absence due to a work injury is ignored.
3. A worker who was a beneficiary for at least three years before reaching 60 still gets the prescribed benefits.

Welfare Fund and benefits

1. Welfare Fund (Section 108): each State Building Workers' Welfare Board keeps the Building and Other Construction Workers' Welfare Fund (made up of the cess, grants and loans). Administrative expenses are limited to 5%.
2. Benefits: such as accident, medical, maternity, education and pension schemes made under the Code†.

Old law: the BOCW Welfare Cess Act, 1996 and the welfare parts of the BOCW Act, 1996 (the safety and regulation parts are now in the OSH Code).

Conclusion: the cess turns construction spending into a safety net for construction workers.

84. Beedi and Cigar Workers, Cine Workers and Centrally Administered Welfare Funds

Exam importance: low

Some groups of workers, such as beedi rollers and film workers, had their own special laws and welfare funds. The Codes merge these laws.

Model exam answer

Workers	Old law	Position under the Codes
Beedi and cigar workers	Beedi and Cigar Workers (Conditions of Employment) Act, 1966	Repealed and merged into the OSH Code (Chapter XI, Part V). Premises for beedi or cigar work need a licence (Section 74), and the State may permit work at home (Section 76).
Cine workers (welfare fund)	Cine-Workers Welfare Fund Act, 1981	Repealed by CoSS Section 164.
Cine workers (conditions of work)	Cine-Workers and Cinema Theatre Workers Act, 1981	Merged into the OSH Code. Audio-visual workers need a written, registered agreement, and the producer is also liable (Section 66)†.

• Centrally administered welfare schemes: the Labour Ministry, through its Labour Welfare Organisation, runs welfare schemes for beedi, cine, limestone and dolomite, iron ore–manganese ore–chrome ore, and mica mine workers. These were earlier financed through separate welfare cesses and funds; the cesses have been abolished and the schemes are now funded from the Consolidated Fund of India. The Codes place cine workers under the Code's schemes.
• Aim: medical, education, housing and other welfare help through these schemes.

Old law: the Beedi and Cigar Workers Act, 1966 and the Cine Workers Welfare Fund Act, 1981.

Conclusion: merging the laws simplifies the rules, and the welfare idea continues.

Module V: Maternity and Women's Benefits (Code on Social Security, 2020)

CoSS Chapter VI (Sections 59–72) replaces the Maternity Benefit Act, 1961 (MBA), as amended in 2017.

85. Applicability of Maternity Benefit (CoSS First Schedule, Chapter VI)

Exam importance: medium

Maternity benefit is a woman's right to leave and pay around childbirth. The Code says which workplaces must give it.

Model exam answer

1. Factories, mines and plantations, including those of the Government.
2. Shops and establishments in which ten or more employees are or were employed on any day of the preceding 12 months.
3. Other establishments notified by the appropriate Government.
4. Eligibility (Section 60(2)): the woman must have actually worked for at least 80 days in the 12 months before her expected delivery. Days of lay-off and paid holidays are counted.
5. Link with ESI (Sections 61 and 41(7)(b)): if ESI covers her, she gets the ESI maternity benefit and cannot also claim maternity benefit from the employer.

Old law: MBA, 1961 (also 80 days, and 10 or more persons in shops).

Conclusion: all large workplaces must give maternity benefit to women who have worked 80 days.

86. Prohibition of Employment Before and After Delivery (CoSS Section 59)

Exam importance: high

A woman needs rest after childbirth. So the law forbids work for six weeks afterwards, and protects a pregnant woman from heavy work.

Model exam answer

1. Bar on the employer (Section 59(1)): the employer shall not knowingly employ a woman during the six weeks immediately following her delivery, miscarriage or medical termination of pregnancy.
2. Bar on the woman (Section 59(2)): she shall not work in any establishment during that period.
3. Arduous work (Section 59(3)): on her request, a pregnant woman shall not be made to do:
   • arduous work;
   • work involving long hours of standing;
   • work likely to interfere with her pregnancy or to cause a miscarriage.
4. Period of this protection (Section 59(4)): the one month before the six weeks preceding the expected delivery, and any part of those six weeks for which she does not take leave.
5. No wage cut (Section 69): her wages cannot be reduced because she is given such lighter work.

Period	Rule
One month before the six weeks preceding the expected delivery	No arduous work, long standing or risky work, if she asks (Section 59(3)–(4))
The six weeks preceding the expected delivery, for any part in which she does not take leave	No arduous work, long standing or risky work, if she asks (Section 59(3)–(4))
Six weeks immediately after delivery, miscarriage or medical termination of pregnancy	The employer shall not knowingly employ her, and she shall not work in any establishment (Section 59(1)–(2))

Old law: MBA, Section 4.

Conclusion: the law protects the health of mother and child.

87. Maternity Entitlements: Duration and Maternity Pay (CoSS Section 60)

Exam importance: high

Under the Code on Social Security, 2020 (CoSS), a woman gets paid leave for a set number of weeks around delivery. The pay is her average daily wage.

Model exam answer

1. Right (Section 60(1)): every woman is entitled to maternity benefit at the rate of the average daily wage for the period of her actual absence, before and after delivery.
2. Duration (Section 60(3)): a maximum of 26 weeks, of which not more than 8 weeks may be before the expected delivery.
3. Two or more surviving children: 12 weeks, of which not more than 6 weeks may be before delivery.
4. Death of the woman or the child: the benefit is for the days up to the death (with special rules where the woman dies and the child survives).
5. Adopting or commissioning mother (Section 60(4)): 12 weeks from the date a child below three months is handed over.
6. Stillborn child: a stillborn child counts as a child.

Situation	Maximum leave with benefit	Part allowed before expected delivery
Ordinary case (fewer than two surviving children)	26 weeks	Not more than 8 weeks
Two or more surviving children	12 weeks	Not more than 6 weeks
Adopting or commissioning mother (child below three months)	12 weeks from the date the child is handed over	Not applicable

Old law: Maternity Benefit Act (MBA), Section 5 (26 weeks after the 2017 amendment; 12 weeks for adoption).

Cases: Municipal Corporation of Delhi v. Female Workers (Muster Roll) and Dr. Kavita Yadav v. Secretary, Ministry of Health and Family Welfare (below).

Conclusion: the Code gives generous paid leave, with special rules for adoption and commissioning.

88. Extended Leave for Illness, Miscarriage and Tubectomy (CoSS Section 65)

Exam importance: medium

Besides the main maternity leave, a woman gets extra paid leave in special medical situations.

Model exam answer

1. Miscarriage or medical termination of pregnancy (Section 65(1)): leave with wages at the rate of maternity benefit for six weeks after it, on proof.
2. Tubectomy (Section 65(2)): a tubectomy is an operation to prevent pregnancy. The woman gets two weeks' leave with wages after the operation.
3. Illness arising out of pregnancy, delivery, premature birth, miscarriage or medical termination (Section 65(3)): in addition to any other leave, up to one month of leave with wages ("additional leave").
4. Proof: as prescribed by the Central Government.

Event	Leave with wages	Section
Miscarriage or medical termination of pregnancy	6 weeks	65(1)
Tubectomy operation	2 weeks	65(2)
Illness arising out of pregnancy, delivery, premature birth, miscarriage or medical termination	Up to 1 month, in addition to other leave	65(3)

Old law: MBA, Sections 9, 9A and 10.

Conclusion: the law covers medical complications, not only a normal delivery.

89. Crèche Facility and Nursing Breaks (CoSS Sections 66–67)

Exam importance: high

A crèche (a day-care centre) lets a mother work while her baby is looked after nearby.

Model exam answer

1. Crèche (Section 67(1)): every establishment covered by the Chapter with fifty or more employees must have a crèche within the prescribed distance, either separately or along with common facilities.
2. Visits: the mother is allowed four visits a day to the crèche, including her rest intervals.
3. Sharing: the establishment may use a common crèche run by the Government, a municipality, an NGO or a group of establishments.
4. Information (Section 67(2)): every woman must be told, in writing and electronically, of all the benefits available under the Chapter at the time of her initial appointment.
5. Nursing breaks (Section 66): two breaks of the prescribed length for nursing the child until the child is 15 months old, in addition to her rest interval. There is no cut in wages for these breaks (Section 69).

Old law: MBA, Sections 11A and 11 (the crèche for establishments with 50 or more employees was added in 2017).

Conclusion: a crèche lets mothers keep working with peace of mind.

90. Work from Home (CoSS Section 60(5))

Exam importance: medium

If the nature of the job allows it, a mother can be allowed to work from home after her maternity leave.

Model exam answer

1. Rule (Section 60(5)): if the work assigned to a woman is such that she may work from home, the employer may allow her to do so after she has availed the maternity benefit.
2. Period and terms: as mutually agreed between the employer and the woman.
3. Nature: the provision is permissive (the employer "may"); it is not a right of the woman.

Old law: MBA, Section 5(5) (added in 2017).

Conclusion: work from home is a flexible option that helps mothers stay in work.

91. Child Care Leave

Exam importance: medium

Child care leave (CCL) is leave, mostly for government employees, to look after young children. It is longer than maternity leave and separate from it. It is not in the CoSS; it comes from service rules.

Model exam answer

1. Nature: CCL is a service-rule benefit (for Central Government employees, under the Leave Rules), not part of the Code. It allows up to 730 days in a career for a woman employee (and a single male parent) to look after up to two children below 18†. It was recommended by the Sixth Central Pay Commission (source: PIB note of 23 March 2022).
2. Courts:
   • The Allahabad High Court (Rachna Chaurasiya, 2017) directed 180 days' maternity leave and 730 days' CCL for all women employees, permanent or contractual.
   • The Supreme Court (Shalini Dharmani, 2024) said CCL is a constitutional necessity under Articles 14, 15 and 21.
3. Difference from maternity leave: maternity leave is for childbirth and is a statutory right of eligible women; CCL is for child care later and depends on service rules.

Point	Maternity leave	Child care leave
Purpose	Childbirth	Care of the child later
Source	Statute (CoSS; earlier the MBA)	Service rules (Leave Rules for Central Government employees)
Nature	Statutory right of eligible women	Service benefit; depends on the service rules
Length	Up to 26 weeks (Concept 87)	Up to 730 days in a career

Conclusion: CCL completes the support that maternity leave starts.

92. Notice of Claim, Payment, Medical Bonus, Additional Leave and Forfeiture (CoSS Sections 62–64 and 70)

Exam importance: high

To get the benefit, the woman gives a notice, and the employer must then pay on time. A medical bonus is paid if no free medical care is given, and the benefit is lost for any period in which she works elsewhere during the leave.

Model exam answer

1. Notice (Section 62): the woman gives written notice to the employer that she will be absent from work, naming a person to receive payment on her behalf.
   • A pregnant woman gives the notice not earlier than eight weeks before the expected delivery.
   • If no notice was given during pregnancy, it may be given as soon as possible after delivery.
2. Payment (Section 62(5)): the benefit for the period before delivery is paid in advance on proof of pregnancy; the balance is paid within 48 hours of proof of delivery.
3. No notice, no loss (Section 62(6)): failure to give notice does not disentitle the woman; the Inspector-cum-Facilitator can order payment.
4. Death (Section 63): if the woman dies, the benefit is paid to her nominee or legal representative.
5. Medical bonus (Section 64): ₹3,500 (or the amount notified) is payable if the employer provides no free pre-natal and post-natal care.
6. Additional leave: up to one month for illness (see Concept 88).
7. Forfeiture (Section 70): a woman who works for pay in any establishment during the period of leave permitted for maternity benefit is not entitled to the benefit for that period.
8. Notice board (Section 71): the employer must display an abstract of the Chapter.

Step	Rule	Section
Notice by the woman	Written; not earlier than 8 weeks before expected delivery; or as soon as possible after delivery	62
Pre-delivery benefit	Paid in advance on proof of pregnancy	62(5)
Balance	Paid within 48 hours of proof of delivery	62(5)
No notice given	No loss of benefit; Inspector-cum-Facilitator may order payment	62(6)
Death of the woman	Benefit paid to nominee or legal representative	63
Medical bonus	₹3,500 (or notified amount) if no free pre-natal and post-natal care	64
Working for pay during leave	No benefit for that period	70
Abstract of the Chapter	Displayed by the employer	71

Old law: MBA, Sections 6–8.

Conclusion: a simple notice-and-payment procedure protects the mother.

93. Dismissal during Maternity (CoSS Section 68)

Exam importance: high

An employer cannot dismiss a woman because she is pregnant or on maternity leave.

Model exam answer

1. Unlawful acts (Section 68(1)): when a woman is absent from work as allowed by the Chapter, it is unlawful for the employer:
   • to discharge or dismiss her during, or because of, that absence;
   • to give her a notice of discharge or dismissal that expires during that absence; or
   • to vary her conditions of service to her disadvantage.
2. Dismissal during pregnancy: a discharge or dismissal during pregnancy does not take away her maternity benefit or medical bonus.
3. Exception: where the dismissal is for gross misconduct as prescribed, the employer may deprive her of the maternity benefit or medical bonus by a written order.
4. Appeal (Section 68(2)): within 60 days to the competent authority, whose decision is final.
5. Offence (Section 133(d)): dismissing a woman in contravention of these rules is punishable with imprisonment up to six months, or fine up to ₹50,000, or both.

Old law: MBA, Section 12.

Conclusion: maternity is not a ground for ending a woman's job.

94. Enforcement: Inspectors and Penalties (CoSS Sections 72 and 133–134)

Exam importance: medium

A woman who does not get her benefit can complain to an officer, and an employer who breaks the law can be punished.

Model exam answer

1. Complaint (Section 72): a woman whose maternity benefit is withheld, or who is dismissed during her leave, may complain to the Inspector-cum-Facilitator.
2. Powers: the Inspector-cum-Facilitator inquires into the complaint and may order payment of the benefit or pass just orders on the dismissal.
3. Appeal: within 30 days to the prescribed authority, whose decision is final.
4. Penalty (Section 133(i) and (d)): failing to give maternity benefit, or wrongly dismissing a woman, is punishable with imprisonment up to six months, or fine up to ₹50,000, or both.
5. Repeat offence (Section 134): for failing again to pay maternity benefit, imprisonment of two to three years and a fine of ₹3 lakh.

Default by the employer	Provision	Punishment
Failing to give maternity benefit, or wrongly dismissing a woman	Section 133(i), (d)	Imprisonment up to 6 months, or fine up to ₹50,000, or both
Failing again to pay maternity benefit (repeat offence)	Section 134	Imprisonment of 2 to 3 years and fine of ₹3 lakh

Old law: MBA, Sections 14 and 21 (Inspectors and penalties).

Conclusion: the Code provides a quick complaint route and real penalties.

Module VI: Vulnerable Workers (CoSS and OSH Code, 2020)

This Module covers the CoSS and the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code). "Vulnerable" means easily harmed. "Unorganised" means not part of a regular, formal workplace.

Part A: Unorganised, Gig and Platform Workers (CoSS Chapter IX, Sections 109–114)

95. Unorganised Worker (CoSS Section 2(86), with Sections 2(85), 2(36), 2(75) and 2(90))

Exam importance: high

Unorganised workers are people in small, informal work with no regular employer benefits: home-workers, street sellers, farm and construction labourers, and domestic workers. They are the largest group of Indian workers and the least protected.

Model exam answer

Term	Section	Meaning
Unorganised sector	2(85)	An enterprise owned by individuals or self-employed workers which, if it employs workers, employs fewer than ten
Home-based worker	2(36)	A person who produces goods or services for an employer, for remuneration, at home or at another place of the worker's choice
Self-employed worker	2(75)	A person not employed by an employer who works in the unorganised sector, subject to a notified monthly earning, or who holds cultivable land within a notified ceiling
Wage worker	2(90)	A person employed for remuneration in the unorganised sector, directly or through a contractor, including temporary, casual, migrant and domestic workers

Old law: Unorganised Workers' Social Security Act (UWSSA), 2008: similar definitions, but it provided only schemes and boards, and implementation was limited.

Conclusion: the Code names each type of unorganised worker and brings them all under registration and schemes.

96. Gig Worker (CoSS Section 2(35))

Exam importance: high

A gig worker earns from short jobs or projects, without a regular employer–employee relationship.

Model exam answer

1. Features: short-term or task-based work; payment per task; no fixed wage, leave or security.
2. Wider than platform work: it includes freelancers and offline gigs.
3. Protection: registration (Section 113) and schemes (Section 114).

Old law: the UWSSA, 2008 had no gig-worker category.

Conclusion: the Code recognises gig work for the first time.

97. Platform Worker (CoSS Sections 2(60) and 2(61))

Exam importance: high

A platform worker gets work through an online app or website, such as a delivery app or a ride app.

Model exam answer

1. Platform work (Section 2(60)): a work arrangement outside a traditional employer–employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services (or other notified activities), in exchange for payment.
2. Platform worker (Section 2(61)): a person engaged in or undertaking platform work.
3. Relation with gig work: every platform worker is a gig worker, but not every gig worker works through a platform.

Point	Gig worker	Platform worker
Provision	Section 2(35)	Sections 2(60) and 2(61)
Source of work	Any work arrangement, including freelance and offline gigs	An online platform (app or website)
Relationship	Outside the traditional employer–employee relationship	Outside the traditional employer–employee relationship
Scope	Wider category	A part of gig work

Conclusion: platform workers are covered by the Code's special schemes.

98. Aggregator (CoSS Section 2(2) and the Seventh Schedule)

Exam importance: high

An aggregator (a digital business that brings buyers and sellers together) is the app or website that connects customers with service providers. It is the "platform".

Model exam answer

1. Categories (Seventh Schedule):
   • ride-sharing services;
   • food and grocery delivery services;
   • logistics services;
   • e-marketplaces for goods or services;
   • professional-services providers;
   • healthcare;
   • travel and hospitality;
   • content and media services;
   • any other goods and services platform.
2. Role: the aggregator pays contributions to the Social Security Fund and takes part in the schemes (Section 114).

Conclusion: the aggregator, though not a classic employer, has social-security duties.

99. Social Security Schemes: Central and State (CoSS Sections 6 and 109–112)

Exam importance: high

Instead of one fixed benefit, the Code asks the Centre and the States to frame welfare schemes for unorganised workers.

Model exam answer

1. Central schemes (Section 109(1)): on life and disability cover, health and maternity benefits, old age protection, education and other benefits.
2. State schemes (Section 109(2)): on provident fund, employment injury benefit, housing, education for children, skill upgradation, funeral assistance and old-age homes.
3. Funding (Sections 109(3) and 110): a scheme may be funded:
   • wholly by the Centre;
   • by the Centre and the State;
   • with contributions from beneficiaries or employers; or
   • from CSR funds and other sources.
   States may seek Central help for their schemes.
4. Contents of a scheme (Section 109(4)): its scope, the authority to implement it, the beneficiaries, its resources, the implementing agencies and grievance redressal. A special purpose vehicle may be set up.
5. Boards (Section 6): the National Social Security Board and the State Unorganised Workers' Boards advise the Government.
6. Records and helpline (Sections 111–112): electronic records with continuous numbers to avoid duplication; a toll-free helpline and facilitation centres for information and registration.
7. Examples of schemes (outside the Code): Pradhan Mantri Shram Yogi Maandhan (pension), Atal Pension Yojana, Ayushman Bharat health cover, the PM insurance schemes, and the e-Shram database†.

Central schemes (Section 109(1))	State schemes (Section 109(2))
Life and disability cover	Provident fund
Health and maternity benefits	Employment injury benefit
Old age protection	Housing
Education	Education for children
Other benefits	Skill upgradation
	Funeral assistance
	Old-age homes

Old law: UWSSA, 2008 (National and State Social Security Boards; limited implementation).

Conclusion: the Code gives a legal base, but the benefits depend on the schemes actually notified.

100. Social Security for Gig and Platform Workers: Aggregator Obligations, Social Security Fund and Contribution (CoSS Sections 114 and 141)

Exam importance: high

For gig and platform workers, the Code asks aggregators to pay a small percentage of their turnover into a fund that pays for the workers' benefits.

Model exam answer

1. Schemes (Section 114(1)): the Centre may frame schemes for gig and platform workers on life and disability cover, accident insurance, health and maternity benefits, old age protection and crèche.
2. Aggregator's role (Section 114(2)): a scheme may set out the role of aggregators, the implementing agencies and the funding.
3. Funding (Section 114(3)): a scheme may be funded:
   • by the Centre;
   • by the Centre and the States;
   • by the aggregators alone;
   • with contributions from the beneficiaries;
   • from CSR funds; or
   • from other sources.
4. Contribution (Section 114(4)): aggregators in the Seventh Schedule categories pay 1% to 2% of their annual turnover, as notified, but not more than 5% of the amount paid or payable to gig and platform workers. Tax and cess are not part of the turnover. The date from which the contribution starts is notified (Section 114(5)).
5. Fund: the contribution goes into the Social Security Fund (Section 141).
6. Board (Section 114(6)): the National Social Security Board serves gig and platform workers. It includes:
   • five representatives of aggregators;
   • five representatives of gig and platform workers;
   • the Director General of the ESIC;
   • the PF Commissioner;
   • experts;
   • five representatives of State Governments; and
   • a Joint Secretary as Member Secretary.
7. Other rules (Section 114(7)): interest on late payment, self-assessment of the contribution, and exemption for some aggregators.

Old law: the UWSSA, 2008 did not recognise gig or platform work (a "new frontier").

Conclusion: the industry shares the cost of protecting the workers it depends on.

101. Registration, Database and Unique ID, and Portability of Benefits (CoSS Sections 111–113 and 142)

Exam importance: high

To receive benefits, a worker must first be on record. The Code sets up registration and a unique number, so that the benefit can follow the worker anywhere.

Model exam answer

1. Who must register (Section 113(1)): every unorganised worker, gig worker or platform worker who has completed 16 years of age and has given a self-declaration.
2. How (Section 113(2)): by an application with documents, including Aadhaar (Section 142). A distinguishable number (unique ID) is assigned. Self-registration on the electronic system is allowed.
3. Benefit (Section 113(3)): a registered worker can avail the benefits of the schemes; the Government makes its contribution (Section 113(4)).
4. Database and records (Section 111): electronic records with continuous numbers to avoid duplication (the national database, for example e-Shram†).
5. Help (Section 112): a helpline and facilitation centres to help register workers.
6. Portability: because the record is tied to a unique number, benefits can be carried across States and jobs†. (For migrant workers, see Concept 116.)

Old law: UWSSA, 2008 (registration was voluntary and paper-based).

Conclusion: a registered worker with a unique ID is visible to the State and can claim benefits anywhere.

Part B: Contract Labour (OSH Code, Chapter XI, Part I, Sections 45–58)

This Part continues Module VI (Vulnerable Workers). Contract labour is now governed by Chapter XI, Part I (ss.45–58) of the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), which takes the place of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA).

102. Contract Labour: Applicability and Definition (OSH Sections 2(m) and 45)

Exam importance: high

Contract labour means workers who work in a factory or office but are hired by a contractor and not by the owner. The Code regulates this triangle: owner, contractor and worker.

Definition (Section 2(m))

Contract labour is a worker who is deemed to be employed in or in connection with the work of an establishment when he is hired in or in connection with such work:

• by or through a contractor;
• with or without the knowledge of the principal employer.

Includes: an inter-State migrant worker.

Excludes: a worker (other than a part-time worker) who is regularly employed by the contractor, whose employment is governed by mutually accepted standards (including employment on a permanent basis), and who gets increments, social security and welfare benefits.

Applicability (Section 45)

The contract labour Part applies to:

1. every establishment in which fifty or more contract labour are employed, or were employed on any day of the preceding twelve months; and
2. every manpower supply contractor who employs fifty or more contract labour.

Work of an intermittent or casual nature

• The Part does not apply where the work is only intermittent or casual.
• Work is not intermittent if it is done for more than 120 days in the preceding 12 months.
• If the work is seasonal, it is not intermittent if it is done for more than 60 days in the preceding 12 months.

Old law and the Code compared

Point	CLRA, 1970 (ss.1–3)	OSH Code, 2020 (s.45)
Threshold	20 or more workmen employed as contract labour	50 or more contract labour
Core activities	No direct ban (case-by-case prohibition)	Contract labour banned in core activities (see Concept 108)

Conclusion: The Code narrows coverage by size (the threshold rises from 20 to 50), but adds a ban on core activities.

103. Principal Employer (OSH Section 2(zz))

Exam importance: high

The principal employer is the real owner of the workplace where the contract workers work.

Definition (Section 2(zz))

Where contract labour is employed	Principal employer
An office or department of Government or a local authority	The head of that office or department (or the officer named for the purpose)
A factory	The owner or occupier of the factory, and the manager named
A mine	The owner or agent of the mine
Any other establishment	Any person responsible for the supervision and control of the establishment

Duties of the principal employer

• Provide welfare facilities to the contract labour (s.53).
• Pay wages if the contractor fails to pay (s.55(3)).
• Engage only licensed contractors (s.54).

Conclusion: The principal employer is the one who cannot hide behind the contractor.

104. Contractor (OSH Section 2(n))

Exam importance: high

A contractor supplies workers to another business, or gets a job done for it through workers.

Definition (Section 2(n))

In relation to an establishment, a contractor is a person who:

1. undertakes to produce a given result for the establishment, other than a mere supply of goods, through contract labour; or
2. supplies contract labour for any work of the establishment as mere human resource;

and the term includes a sub-contractor.

Duties of the contractor

Duty	Section
Hold a licence	s.47
Charge no fee or commission from the workers	s.49
Intimate work orders	s.50
Pay wages	s.55
Give experience certificates	s.56

Conclusion: Contractors must be licensed and accountable.

105. Registration and Licensing (OSH Sections 3 and 47–52)

Exam importance: high

The establishment must be registered, and the contractor must hold a licence. This lets the Government know who is employing whom.

Registration of the establishment (Section 3)

• Every covered employer applies electronically within 60 days.
• The registration certificate is issued electronically. If it is not issued in time, the establishment is deemed to be registered.
• Any change is reported within 30 days; closure is reported within 30 days.
• The application includes details of inter-State migrant workers.
• This replaces the old "registration of principal employers".

Licensing of contractors (Sections 47–52)

Aspect	Section	Rule
Licence required	s.47	No contractor shall supply or engage contract labour except under a licence from the designated authority. The licence states the number of workers and the security deposit. A work-specific licence can be given to a contractor who does not meet all the criteria.
Validity and procedure	s.48	Application is made electronically; the licence is valid for five years; the number of workers can be increased by amendment.
No fee from workers	s.49	The contractor cannot charge any fee from the workers.
Revocation	s.51	For misrepresentation or breach of conditions, after a show-cause notice.
Appeal	s.52	Filed within 30 days; disposed of within 30 days.
Unlicensed contractor	s.54	Employment of contract labour through an unlicensed contractor is a contravention of the Code.

Old law: CLRA, s.7 (registration of principal employers) and s.12 (licensing of contractors).

Conclusion: One electronic system of registration and licensing makes it easy to trace responsibility.

106. Registers and Records; Welfare Provisions (OSH Sections 33, 53, 23 and 24)

Exam importance: medium

Employers must keep records of workers and give basic welfare. For contract labour, the principal employer must provide the welfare facilities.

Registers and records (Section 33)

The employer must:

1. maintain registers, electronically or otherwise, showing:
   • work performed, normal hours of work and the day of rest;
   • wages paid and receipts;
   • leave, overtime and attendance;
   • dangerous occurrences; and
   • employment of adolescents;
2. display notices;
3. issue wage slips; and
4. file returns electronically to the Inspector-cum-Facilitator.

Welfare (Section 53)

The welfare facilities under ss.23 and 24 (health, safety and working conditions; welfare facilities) must be provided by the principal employer to the contract labour in the establishment.

Contractor's duties

• Give an experience certificate on demand (s.56).
• Make no charges to the workers (s.49).

Old law: CLRA, ss.20–21 (liability for wages) and the welfare sections (canteen, rest rooms, drinking water and first aid).

Conclusion: Records and welfare make the contract worker visible and cared for.

107. Liability of the Principal Employer (OSH Sections 53–55)

Exam importance: high

The principal employer cannot ignore the contract workers. If the contractor fails to pay, the principal employer must pay, and can recover the amount from the contractor.

Heads of liability

1. Wages (s.55(1)–(2)): the contractor is responsible for paying wages, by bank transfer or electronic mode, and informs the principal employer.
2. Default (s.55(3)): if the contractor fails to pay or short-pays, the principal employer must pay the full or unpaid wages, and may recover the amount from the contractor by deduction from any amount payable to him or as a debt.
3. Security deposit (s.55(4)): the Government can order payment of unpaid wages out of the contractor's security deposit.
4. Welfare (s.53): the principal employer provides the facilities under ss.23–24.
5. Unlicensed contractor (s.54): employment through an unlicensed contractor is a contravention.
6. Other liabilities: for compensation (CoSS s.85) and for PF and ESI contributions (CoSS ss.17 and 31), with the right to recover from the contractor.

Old law: CLRA, ss.20–21.

Conclusion: The principal employer is the safety net for the contract worker's pay.

Cases on absorption of contract labour

108. Prohibition of Employment as Contract Labour; Advisory Board Recommendations (OSH Sections 2(p), 45(2) and 57)

Exam importance: high

The old law allowed the Government to ban contract labour job by job after taking advice. The Code bans contract labour in core activities directly, with three exceptions.

The rule (Section 57(1))

Employment of contract labour in the core activities of any establishment is prohibited.

Core activity (Section 2(p))

A core activity is any activity for which the establishment is set up, and includes any activity that is essential or necessary to that activity.

Not core activities (where the establishment is not set up for them):

• sanitation and cleaning;
• watch and ward (security);
• canteen and catering;
• loading and unloading;
• running hospitals, schools, guest houses and clubs as support services;
• courier support services.

Three exceptions (proviso to Section 57(1))

Contract labour may be engaged in a core activity where:

1. the normal functioning of the establishment is such that the activity is ordinarily done through a contractor;
2. the activity does not require full-time workers for the major part of the day or for longer periods; or
3. there is a sudden increase in work that must be done in a specified time.

Deciding what is core (Section 57(2))

• The Government appoints a designated authority to advise on whether an activity is core.
• An aggrieved party may apply.
• The Government decides.

Advisory Boards

The Government consults the National or State Advisory Board, for example on whether work is intermittent or casual (s.45(2)).

Old law and the Code compared

Point	CLRA, s.10	OSH Code, s.57
Method	The Government could prohibit contract labour in a process, case by case	Direct ban on contract labour in core activities
Advice	After consulting the Central or State Advisory Board	Designated authority advises on what is core; National or State Advisory Board consulted (for example under s.45(2))
Test or exceptions	Test: the work is perennial, is ordinarily done by regular workmen, and is enough to employ full-time workers	Three fixed exceptions: usual practice, no full-time need, sudden rush of work
Cases	Air India and SAIL arose under this section	—

Conclusion: The Code replaces case-by-case bans with a direct ban on core activities, and allows fixed exceptions.

109. Offences and Penalties: Contract Labour (OSH Sections 54, 57 and 97; CLRA)

Exam importance: medium

If the principal employer or the contractor breaks the rules, the Code imposes penalties.

Contraventions

• Using an unlicensed contractor (s.54).
• Engaging contract labour in a core activity in breach of s.57.
• Not paying wages (s.55).
• Charging fees from workers (s.49).
• Breaking licence conditions.

Penalties

Situation	Section	Punishment
Contravention of the Code, or of an order regulating employment of workers including contract labour	s.97(1)	Penalty of not less than ₹50,000 but up to ₹1 lakh
Repeat offence	s.97(2)	Imprisonment up to three months, or fine up to ₹2 lakh, or both

Other consequences: licences can be revoked or suspended (s.51); the Inspector-cum-Facilitator can inspect and prosecute.

Old law: CLRA, 1970: imprisonment up to three months or a small fine, ss.23–25.

Conclusion: The Code uses fines first, and imprisonment for repeat offenders.

Module VII: OSH Code, 2020 – Inter-State Migrant Workers

A migrant is a person who moves from one place to another for work. Inter-State means between two States.

Chapter XI, Part II (ss.59–65) of the OSH Code replaces the Inter-State Migrant Workmen Act, 1979 (ISMW Act).

110. Inter-State Migrant Worker and Contractor (OSH Sections 2(zf) and 2(n))

Exam importance: high

An inter-State migrant worker is a low-paid worker who has moved from one State to work in another. The Code covers not only workers brought by a contractor but also workers who come on their own.

Definition (Section 2(zf); also CoSS Section 2(41))

An inter-State migrant worker is a person employed in an establishment who:

1. has been recruited directly by the employer, or through a contractor, in one State for employment in an establishment in another State; or
2. has come on his own from one State and obtained employment in an establishment of another State (the destination State), or has changed his establishment within the destination State;

and who:

• is employed under an agreement or other arrangement for such employment; and
• draws wages not exceeding ₹18,000 a month (or a higher amount as notified).

Contractor (Section 2(n))

A person who undertakes to produce a given result through contract labour, or supplies contract labour as mere human resource; the term includes a sub-contractor. An inter-State migrant worker is contract labour (s.2(m)).

What is new

Point	ISMW Act, 1979 (ss.1–2)	OSH Code, 2020
Who is covered	Only workers recruited by or through a contractor	Also workers who migrate on their own
Definition	Had definitional gaps	Wider definition, with a wage ceiling of ₹18,000 a month

Conclusion: A wider definition brings self-migrating workers under protection.

111. Applicability and Threshold (OSH Section 59)

Exam importance: high

The migrant-worker rules apply only to establishments that employ a minimum number of migrant workers.

1. Rule (s.59): Part II applies to every establishment in which ten or more inter-State migrant workers are employed, or were employed on any day of the preceding twelve months.
2. Wage limit: the worker must draw wages of up to ₹18,000 a month (from the definition).
3. Registration: the establishment's application under s.3 must include information on inter-State migrant workers.

Law	Threshold
ISMW Act, 1979	Five or more migrant workmen (also applied to contractors employing five or more)
OSH Code, 2020 (s.59)	Ten or more inter-State migrant workers

Conclusion: A higher threshold reduces coverage of small employers.

112. Registration of Establishments and Licensing of Contractors (OSH Sections 3 and 47–48)

Exam importance: medium

The establishment must be registered, and contractors who bring migrant workers must be licensed. Both must give details of the migrant workers.

1. Registration (s.3): the employer applies electronically within 60 days, giving information on inter-State migrant workers (s.3(2)).
2. Licence (ss.47–48): a contractor needs a licence, and the application includes information on inter-State migrant workers (s.48(1)). Where a contractor recruits for several States or all India, he may obtain the licence from the Central authority, which consults the States.
3. No fee from workers (s.49).

Old law: ISMW Act, 1979: registration of establishments by principal employers (ss.4–6) and licensing of contractors (ss.7–11). The course outline also cites ss.14–22 (allowances, wages and the principal employer's liability) and the topic "inadequacy of implementation".

Conclusion: One system for contract labour and migrant workers reduces paperwork.

113. Journey Allowance, Displacement Allowance and Return Fare (OSH Section 61)

Exam importance: high

A migrant worker must spend money to travel home. The employer must pay a yearly amount for the journey to and from the worker's native place.

Journey allowance (Section 61)

• The employer must pay every inter-State migrant worker, once in a year, a lump sum amount of fare for the to-and-fro journey between the place of employment and his native place.
• The rules fix the minimum period of service, how often it is paid, and the class of travel.
• This annual fare is what the course outline calls the "return fare".

Displacement allowance

Under the old ISMW Act, 1979, a displacement allowance was payable: a one-time payment on recruitment, equal to 50% of monthly wages or ₹75, whichever was higher.

The Code (Part II) has no separate displacement allowance.

Extinguishing debts (Section 65)

Debts owed by the worker to the contractor or principal employer are deemed to be extinguished after the employment ends, and no suit lies to recover them.

Benefit	ISMW Act, 1979	OSH Code, 2020
Journey allowance (return fare)	Yes	Yes: annual to-and-fro fare (s.61)
Displacement allowance	Yes: one-time payment on recruitment	No separate displacement allowance
Wage parity and other benefits	Yes (ss.14–22, as cited in the course outline)	Same benefits as other workers of the establishment (s.60; see Concept 115)

Conclusion: The Code keeps the annual fare but drops the displacement allowance.

114. Toll-Free Helpline (OSH Section 63)

Exam importance: medium

A migrant worker in a strange State may not know whom to call. A helpline gives help and information.

1. Section 63: the appropriate Government may provide a toll-free helpline for inter-State migrant workers, in the manner it prescribes.
2. Uses: to seek help, report problems and get information on benefits.
3. Nature: the provision is enabling: the Government may provide it (it is not bound to).
4. Related provision: the same idea appears in CoSS s.112 (helpline and facilitation centres for unorganised, gig and platform workers).

Conclusion: The helpline connects a migrant worker to the State.

115. Duties of Contractors and Principal Employers (OSH Sections 49, 53–55 and 60–61)

Exam importance: high

The contractor and the employer must give a migrant worker suitable conditions of work, equal benefits and help in case of an accident.

Duties under Section 60

It is the duty of every contractor or employer of an establishment employing inter-State migrant workers:

1. to ensure suitable conditions of work, having regard to the fact that the worker is working in a State different from his own;
2. in case of a fatal accident or serious bodily injury, to report it to the authorities of both States and to the worker's next of kin;
3. to extend all benefits available to a worker of that establishment, including benefits under the ESI, EPF and other laws, and the facility of a medical check-up.

Other duties

Duty	Section
Pay the yearly journey fare	s.61
Pay wages by bank transfer; if the contractor fails, the principal employer pays	s.55
Take no fee or commission from workers	s.49
Provide welfare facilities	s.53

Old law: ISMW Act, 1979: the contractor's duties (wage parity, records and passbooks).

Conclusion: The migrant worker gets the same benefits as local workers, and extra care.

116. Portability of Benefits and Social Mapping of Migrant Workers (OSH Sections 21, 62 and 64)

Exam importance: high

Portability means that the migrant worker should not lose ration or welfare benefits when he moves. Social mapping means finding out who the migrant workers are, where they come from and where they work.

Measures under the Code

Measure	Provision	Content
Public distribution system	s.62(a)	The Government must make schemes so that a migrant worker can choose to take ration benefits either in his native State or in the destination State.
Construction cess fund	s.62(b)	For a migrant building worker, portability of benefits out of the building and construction cess fund in the destination State.
Portal and statistics	s.21	The Government is to collect statistics and maintain a portal for inter-State migrant workers.
Study	s.64	The Government may provide for a study of inter-State migrant workers.
Registration and unique ID	CoSS s.113	Registration and a unique ID for unorganised workers allow a national database (for example e-Shram).

Social mapping in Odisha (case studies in the course readings)

• Odisha is a major source State of migrant workers.
• Many workers from districts such as Ganjam and Balangir go to other States for work in construction, brick kilns and textiles.
• Mapping records the districts, the contractors and the destinations, so that help can be given at both ends.

Old law: ISMW Act, 1979: passbooks and records, with enforcement failure.

Conclusion: Portability and mapping turn the migrant worker from "invisible" into "counted".

117. COVID-19 as an Illustration

Exam importance: medium

The 2020 lockdown showed why protection of migrant workers matters. Millions of workers lost work overnight, and had no record, no benefits and no way to go home.

What happened

As described in the course readings, the sudden lockdown of March 2020 left large numbers of migrant workers without work, wages, food or transport. Many walked long distances to reach their villages.

Why the ISMW Act, 1979 failed

• Few establishments and contractors were registered or licensed.
• There were no reliable records of who the migrants were.
• There was no portability of ration or welfare benefits.
• Enforcement was weak.
• The definition left out workers who migrated on their own.

Wages during the lockdown

The MHA order of 29 March 2020 directing payment of wages was challenged (Ludhiana Hand Tools; Align Components; see Concept 24).

How the Code responds

• A wider definition that covers self-migrants.
• Registration and licensing with migrant details.
• A portal and database.
• An annual journey fare.
• A helpline.
• The PDS option and portability of benefits.
• Liability of the principal employer for wages.

Caution: these benefits depend on rules, schemes and enforcement by the States.

Old law: ISMW Act, 1979: enforcement failure, with the COVID-19 crisis as the illustration.

Conclusion: COVID-19 exposed the gaps; the Code is meant to close them, if it is enforced.

Last-Minute Revision: Most Important Definitions

This revision section is for reading just before the exam. Section numbers are from the Labour Codes: the Code on Wages (CoW), the Code on Social Security (CoSS) and the Occupational Safety, Health and Working Conditions Code (OSH Code). "Old law" means the earlier Act with which each Code is compared.

1. Social security (CoSS s.2(78))

2. Wages (CoW s.2(y))

• Meaning: all remuneration.
• Includes: basic pay, dearness allowance (DA) and retaining allowance.
• Excludes: bonus, house accommodation, PF contribution, conveyance, house rent allowance (HRA), awards, overtime, commission, gratuity and retirement benefits.
• 50% rule: if the exclusions exceed 50%, the excess is added back to wages.
• Remuneration in kind: counts as wages up to 15%.

3. Employee and worker (CoW ss.2(k) and 2(z))

Point	Employee (s.2(k))	Worker (s.2(z))
Meaning	Any person employed on wages in an establishment for any skilled, unskilled, managerial, clerical or other work.	A narrower class.
Excluded	An apprentice and a soldier.	Managers, and supervisors earning above ₹15,000.
Levels covered	All levels.	No managers; supervisors only if earning up to ₹15,000.

4. Employer (CoW s.2(l))

One who employs directly or through any person. It includes the occupier, the person in control, the manager, the contractor and the legal representative.

5. Floor wage and minimum wage (CoW ss.9 and 5)

Term	Section	Meaning
Floor wage	CoW s.9	The national base wage fixed by the Centre. No minimum wage can be below it.
Minimum wage	CoW s.5	The lowest legal wage. It applies to all employees and is reviewed at intervals not exceeding five years.

6. Available surplus and allocable surplus (bonus)

• Available surplus = gross profit − prior charges.
• Allocable surplus = 67% of the available surplus (60% for banks).

7. Dependant (CoSS s.2(24))

Class	Who	Condition
Always dependants	Widow, minor son, unmarried daughter, widowed mother	None
Conditional	Infirm adult child	If wholly dependent
Others	Other listed relatives	If dependent

8. Employment injury (CoSS s.2(28))

An injury by accident or occupational disease arising out of and in the course of employment. A commuting accident is covered where there is a nexus with employment.

9. Kinds of disablement

Kind	Section (CoSS)	Meaning
Permanent total disablement	s.2(56)	Unfit for all work he could do before.
Permanent partial disablement	s.2(55)	Reduced earning capacity.
Temporary disablement	s.2(83)	Unfit for the usual work for a time.

10. Insured person and continuous service

• Insured person (CoSS s.28): a covered employee for whom ESI contributions are payable.
• Continuous service (CoSS s.54): uninterrupted service. Sickness, leave, layoff and strike are ignored. 240 days = 1 year (190 days in mines).

11. Unorganised, gig and platform workers; aggregator (CoSS)

Term	Section	Meaning
Unorganised worker	s.2(86)	A home-based, self-employed or wage worker in the unorganised sector.
Gig worker	s.2(35)	One who earns outside a traditional employer–employee relationship.
Platform worker	s.2(61)	One who does platform work through an online platform.
Aggregator	s.2(2)	A digital intermediary connecting the buyer and the provider.

12. Contract labour and migrant workers (OSH Code)

Term	Section	Meaning
Contract labour	OSH s.2(m)	A worker hired by or through a contractor.
Principal employer	OSH s.2(zz)	The owner or controller of the workplace.
Contractor	OSH s.2(n)	One who produces a result through contract labour or supplies manpower.
Inter-State migrant worker	OSH s.2(zf)	A worker recruited (or self-migrated) from one State to another, with wages up to ₹18,000 a month.

Most Important Legal Provisions: A Map

Topic	Code and sections	Old law
Wages definition; equal pay	CoW 2(y); 3–4	Payment of Wages Act (PWA), Minimum Wages Act (MWA), Bonus Act; Equal Remuneration Act
Minimum wage; floor wage; procedure; components	CoW 5–9; 8; 7	MWA 1948
Overtime; hours	CoW 14; 13	MWA s.14
Time and mode of payment; deductions	CoW 16–17; 15; 18–24	PWA 1936
Bonus	CoW 26–41 (eligibility 26; disqualification 29; allocable surplus 31; set-on/set-off 36; time 39)	Bonus Act 1965
Advisory Boards; claims; appeal	CoW 42; 45; 49	MWA s.20; PWA s.15
Employee's compensation	CoSS 73–99 (liability 74; amount 76; default 77; wages 78; distribution 81; notice and claim 82)	Employee's Compensation Act (ECA) 1923
ESI	CoSS 24–52 (benefits 32; presumption 34; bar 41; Employees' Insurance Court 48–52)	ESI Act 1948
Gratuity	CoSS 53–58 (payable 53; continuous service 54; determination 56; insurance 57)	Payment of Gratuity Act 1972
Provident fund	CoSS 14–23 (schemes 15; contributions 16)	EPF Act 1952
Maternity	CoSS 59–72 (benefit 60; notice 62; medical bonus 64; leave 65; crèche 67; dismissal 68)	Maternity Benefit Act 1961
Building workers cess	CoSS 100–108	BOCW Cess Act 1996
Unorganised, gig and platform workers	CoSS 109–114 (registration 113; gig schemes and contribution 114)	Unorganised Workers' Social Security Act (UWSSA) 2008
Contract labour	OSH 45–58 (applicability 45; licence 47; welfare 53; wages 55; core activity 57)	CLRA 1970
Migrant workers	OSH 59–65 (threshold 59; duties 60; journey 61; PDS 62; helpline 63)	Inter-State Migrant Workmen Act 1979
Penalties	CoW 54; CoSS 133–134; OSH 97	—

Most Important Differences: Old Law and the Codes

Point	Old law	Code
Minimum wage coverage	MWA: only scheduled employments	All employees; national floor wage
Payment of wages coverage	PWA: wage ceiling ₹24,000	No ceiling (Government establishments only if notified)
Overtime	Rate fixed by law	Not less than 2 times the normal rate
Definition of wages	Different in each Act	One definition; 50% rule
Claim time; compensation	6 months (MWA), 12 months (PWA)	3 years; compensation up to 10 times the claim
Bonus disqualification	3 grounds	4 grounds (adds conviction for sexual harassment)
Work-injury compensation	No commuting cover	Commuting accident covered where there is a nexus; funeral expenses at least ₹15,000
ESI coverage	Notified factories and establishments	All with 10 or more; hazardous establishments even with 1
Gratuity	Fixed-term employees not clearly covered	Fixed-term employees pro rata (no 5-year requirement on expiry of the term)
Maternity leave	12 weeks (before 2017)	26 weeks; crèche at 50 or more; work from home
Contract labour threshold	20	50; ban in core activities
Migrant workers	5 or more; only contractor-recruited workers; displacement allowance	10 or more; self-migrants covered; journey fare, PDS portability, helpline
Gig and platform workers	Not recognised (UWSSA 2008)	Recognised; aggregator pays 1–2% of turnover

Frequently asked distinctions

Pair	Distinction
Employee v. worker	Employee: all levels. Worker: no managers; supervisors only if earning up to ₹15,000.
Set-on v. set-off	Set-on: the excess is carried forward. Set-off: the deficiency is carried forward. Both for 4 years.
Employee's compensation v. ESI	If the employee is covered by ESI, only ESI benefits are available. If not covered, compensation is claimed under Chapter VII (CoSS).

Most Important Formulas

Wages, overtime and bonus

Formula	Rule
Wages	Basic + DA + retaining allowance; exclusions capped at 50%; remuneration in kind up to 15%
Overtime	2 × the normal rate per hour
Bonus pool	Gross profit − prior charges (depreciation, direct tax) = available surplus; allocable surplus = 67% (banks 60%)
Bonus	Minimum 8⅓% or ₹100; maximum 20%; at least 30 days worked; paid within 8 months
Set-on and set-off	4 years; cap of 20% of total wages

Employee's compensation

Formula	Rule
Death	50% × monthly wages × relevant factor (or the notified amount, if more) + funeral expenses of at least ₹15,000
Permanent total disablement	60% × monthly wages × relevant factor
Permanent partial disablement	% loss of earning capacity × the permanent total disablement amount
Temporary disablement	25% of monthly wages, paid half-monthly; from the 16th day (if disablement lasts 28 days or more) or after a 3-day waiting period
Monthly wages	One-twelfth of the wages of the last 12 months; failing that, the wages of a similar worker; failing that, 30 × wages ÷ days worked
Late payment	After 1 month: interest + damages up to 50%
Time limits	Notice as soon as possible; claim within 2 years; appeal to the High Court within 60 days

ESI, gratuity and provident fund

Formula	Rule
ESI	Employer 3.25% + employee 0.75% of wages; wage ceiling ₹21,000; Employees' Insurance Court: limitation 3 years, 50% deposit
Gratuity	(Last monthly wages ÷ 26) × 15 × years of service; 5 years' service needed; a part-year above 6 months counts as 1 year; ceiling as notified (₹20 lakh); paid within 30 days
Provident fund	Employer 12% (10% in some cases) + employee an equal amount; pension up to 8⅓%; EDLI up to 1%

Maternity, building workers, gig workers and contract labour

Formula	Rule
Maternity	26 weeks (up to 8 before delivery); 12 weeks for a woman with 2 or more children; adoption or commissioning mother 12 weeks; 80 days worked; medical bonus ₹3,500; crèche at 50 or more employees
BOCW cess	1–2% of the cost of construction; beneficiaries aged 18–60 with 90 days of work
Aggregator contribution	1–2% of annual turnover, capped at 5% of the amount paid to gig and platform workers
Contract labour and migrants	Contract labour: 50 or more workers; licence for 5 years. Migrant workers: threshold 10 or more; wage limit ₹18,000

Most Important Case Laws

Minimum wages

Bonus

Employee's compensation and ESI

Provident fund and pension

Maternity and child care

Contract labour

Most Important Concepts for Long Answers

1. Wages: the unified definition, the 50% rule, and why the definition was unified.
2. Floor wage and minimum wage: with the three wage concepts and the case law.
3. Bonus: eligibility, formula, minimum and maximum, set-on and set-off, disqualification, time limit.
4. Employer's liability for compensation: defences, notional extension and the compensation formulas.
5. ESI: benefits, "arising out of and in the course of employment", presumption, bar, Employees' Insurance Court.
6. Gratuity: continuous service, formula, forfeiture, insurance.
7. Provident Fund, Pension Scheme and EDLI.
8. Maternity benefit: 26 weeks, crèche, protection against dismissal, and the four maternity cases.
9. Gig and platform workers: definitions, aggregator contribution, registration and unique ID.
10. Contract labour: licence, ban in core activities, principal employer's liability, and Air India / SAIL.
11. Migrant workers: definition, threshold, journey allowance, portability, and the COVID-19 illustration.
12. Constitution and ILO: Arts. 14, 19, 21, 23 and 24; Arts. 38–47; ILO C.102, C.183 and R.202.
13. The four Labour Codes: 29 laws merged into 4; their objectives and structure.

Quick revision

• Social security v. welfare: social security is a safety net under the worker; welfare is daily comfort.
• Fundamental Rights (Arts. 14, 19, 21, 23, 24): Equal, Free, Dignity, No force, No child in danger.
• Directive Principles: 38 Justice · 39 Livelihood and equal pay · 41 Help · 42 Humane conditions and maternity · 43 Living wage · 43A Say in management · 47 Health.
• The Codes: W-I-S-O (Wages, Industrial Relations, Social Security, OSH) = 4 + 3 + 9 + 13 = 29 laws.
• Wages: Basic + DA + Retaining, never below 50%. Overtime: twice the normal rate.
• Wage concepts: floor = basement; minimum = lowest legal; fair = middle; living = comfortable.
• Time of payment: daily = end of the shift; weekly = last working day; fortnightly = within 2 days; monthly = within 7 days; on leaving service = within 2 working days.
• Deductions: only those listed, never above 50%; fines up to 3%.
• Bonus: 8⅓% to 20%; 67% of available surplus; FRTS disqualifies; pay within 8 months.
• Wage claims: claim within 3 years · appeal within 90 days · compensation up to 10 times.
• Employee's compensation: Death 50 · Total disablement 60 · Temporary 25. PAO = Personal injury by Accident or Occupational disease, arising Out of and in the course of employment.
• Employer's defences: 3 days; drink or drugs; disobedience; safety guard removed. The defences are not available for death or permanent total disablement.
• ESI: 10 or more persons; 3.25 + 0.75; an accident IN the course of employment is presumed to arise OUT of it.
• Gratuity: ÷ 26 × 15 × years; 5 years; forfeited for damage, violence or moral turpitude.
• Provident fund: 12 + 12; pension 8⅓; EDLI 1.
• Maternity: 26 weeks (8 before delivery); crèche at 50 or more; 4 crèche visits; no dismissal.
• Gig workers: the aggregator pays 1–2% of turnover, capped at 5% of payouts.
• Contract labour: 50 or more; core activity = no contract labour; the principal employer pays if the contractor fails.
• Migrant workers: 10 or more; ₹18,000; one return fare a year; ration and cess benefits move with the worker.